2017 Fall Online 202-301 Homework: Homework # 6 Score: 0 of 1 pt Checkpoint 2 Pr

Question

2017 Fall Online 202-301 Homework: Homework # 6 Score: 0 of 1 pt Checkpoint 2 Problem 1 19 of 28 (13 HW Score: Poinsettia growing is a perfectly competitive industry and all growers have the same costs The market price of poinsettias is $29 a pot and each grower maximizes proft by producing 700 pots a week verage total cost of producing poinsettias is $11 a pot and average variable cost is 58 a pot Minimum average variable cost is $4 a pot of aweek In the short run, each grower is window and do not enter a minus sign o If the firm incurs an O Type here to search

Explanation / Answer

Market Price P =$29

Quantity:-700 pots a week

ATC=$11

AVC=$8= TC/Q

TC=AVC*Q=700*$8 =$5600

AVC=$8

Profit maximization MR=MC

TR=P*Q=$29*700 =$20300

P=MC=$29

P>AVC i.e. ($29>$8)

ATC=11

As the price is more than the ATC and AVC, thus the firm is earning the economic profit.

The profit = (Price-ATC)*Quantity

Profit = ($29-$11)*700

Profit=$12600

So the correct answer is:- Making an economic profit of $12600

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