Use the graph to the right for Elijah\'s burgers If Elijah produces at the profi

Question

Use the graph to the right for Elijah's burgers If Elijah produces at the profit-maximizing level of output, his total revenue will be (Enter your response rounded to the nearest dollar) $5.60 MC | Elijah's total cost is $ (Enter your response rounded to the nearest dollar) S4 8 4.00+.. Elijah is earning economic profit (Enter your response rounded to the nearest dollar.) In the long run, Elijah's profits will ATC s240AVo ...wAVC .. ..~ $1.6 $0.80 soo .… fall as new firms enter the market. rise as customers order more burgers. fall as customers tire of burgers. O A. 8501,700 2,550 0 450900 1.350 1.800 2,250 2.700 O B. C. Quanity 0 D. rise as new firms enter the market

Explanation / Answer

Profit maximizing output occurs when MR=MC.

Therefore, Quantity (Q)=1700 is the profit maximizaing output.

At this quantity, the maximum price that Elijah's can charge=$3.2/unit (corresponding to the Demand Curve)

Thus, Revenue=$ (3.2*1700)=$ 5440

ATC at this level of output (1700 units)=$ 2.4 /unit

Therefore, Elijah's Total Cost= $(2.4*1700)=$ 4080

Elijah's Economic Profit=Revenue-Cost=$5440-$4080=$ 1360

In the long run, Elijah's profits will "fall as new firms enter the market".

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.