marks People Window Help 13% D tt College - EC Gthe graph below represents a lea
ID: 1104067 • Letter: M
Question
marks People Window Help 13% D tt College - EC Gthe graph below represents a learning.com,/ibiscms/mod/ibis/view.phpid-3801767 marginal cost pri ing Jump to... 11/3/2017 11:55 PM845/100 0 11/4/2017 02:01 PM Gradebook S- Mon & caculator o Map. Sapling Learning The graph on the right presents the costs and revenue for a purely compettive firm, where the price is equal to $300 per unit of output. This frm has a foxed cost determine the profe-maximizing output and proft for this fim market to $3.600 Use this information to 1. What is the prott-maximiz this purely compestive firm? ( answer to the nearest whole number. output of 17| 11:55 PM 17/05:00 PM 2017|05:00 PM Average Total Cost Units of Outpat 2 What is the maximum levell of profits for p 1000 ansaver to the nearest postive or negatve whole number) Average Vaable Cont 5Explanation / Answer
Answer 1 - According to the diagram which shows cost curves and MR curve that a firm faces. In the diagram we can see that market price is below its minimum average variable cost. We know that a competitive firm produce till P>AVC. If price is equal to AVC, this last point where firm produce. If price goes below AVC, then firm shut down its plant. Minimum AVC is equal to $400 and market price is $300 per units. The firm will produce nothing at this level of output. But if this decides to works in loss then it would produce 3 units (approx) because MC and MR are equal at this point.
Answer 2 - If firm produce 3 units then its TR = 300*3 = $900
TC = TFC + TVC
TC = 3600 + 3*350 (approx)
TC = 3600 + 1050
TC = 4650
Profit = TR - TC
Profit = 900 - 4650
Profit = -$3750
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