FINAL EXAM MICROECONOMICS FALL. 2017 (4) - Word Robert, Danielle - File Home Ins
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FINAL EXAM MICROECONOMICS FALL. 2017 (4) - Word Robert, Danielle - File Home Insert Draw Design utReferences Mailings Review View Tell me what you want to do Share- Use figure 6.3 to answer questions 25-30 Figure 6.3 MC ATC (-+- 4 48 29. Refer to Figure 6.3 for a perfectly competitive firm. If price is $4, the firm is: D) Earning an economic profit. 30. Refer to Figure 6.3 for a perfectly competitive firm. If price is $10, the firm is D) Earning an economic profit. A) In long run equilibrium B) Earning an economic loss. A) B) In long run equilibrium. Barning an economic loss C) Maximizing efficiency Page 6 of 17 2373 words + 100% O Type here to search 3:44 PM 2/3/2017Explanation / Answer
Q29
the perfectly competitive firm maximizes profit at MC=P
P=$4, then Q=32, ATC>$6
Economic loss=(ATC-P)*Q
ATC>P, at this price the firm is earning losses.
option B
Q30
P=$10, Q=48 and ATC<$8
Profit=(P-ATC)*Q
P>ATC, the firm is earning the profit.
Option D
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