The graph shows the demand curve and marginal revenue curve of At Home, Inc. Pri

Question

The graph shows the demand curve and marginal revenue curve of At Home, Inc. Price and cost (dolliars per player) a producer of DVD players in monopolistic competition. Draw the firm's marginal cost curve if At Home produces 40 DVD players a week Label it Draw a point at the proft-maximizing quantity and price. it average total cost at the profit-maximizing quantity is 210 $180 a player. At Home's economic profit is Quantity (DVD plxyers per week) Draw only the objects specified in the question Click the graph choose a tool in the palette and tollow the instructions to cresate your graph 96 5 4 6 8 9

Explanation / Answer

Average Total Cost at Profit Maximizing Price will be $180

Profit Maximizing Price such that when MR=MC (Marginal Revenue Curve meets Marginal Cost Curve)

Total Cost=ATC*Quantity=$180*40=$72000

Price can be calculated with the help of demand curve as by drawing perpendicular line from Q=40 till Demand curve. Now this perpendicular line intersects demand curve take that coordinate on Y axis and that is our price =$240

Revenue=Price *Quantity=$240*40=$96000

Profit=TR-TC=$96000--$72000=$24000

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