1.What is the price? 2. What is the Total Revenue? 3. What is the Average Fixed

Question

1.What is the price?

2. What is the Total Revenue?

3. What is the Average Fixed Cost?

4. What is the Average Variable Cost?

5. What is the Total Cost?

6. What is the Total Profit (or Loss)?

7. What is the profit-maximizing level of output?

8. What is the Average Variable Cost?

9. What is the Variable Cost?

10. What is the Total Cost?

11. What is the Fixed Cost?

12. What is the Average Fixed Cost?

13. At this level of output, what is the price?

14. What is the Total Revenue?

15. What is the Total Profit (or loss)?

Why does Marginal Cost intersect Average Total Cost at ATC’s lowest point?

A PERFECTLY COMPETITIVE MARKET "BEWARE THE SNAKE OIL SALESMAN" This graph represents a single firm in the perfectly competitive market for Snake Oil. All firms have a similar graph. This is a short-run scenario. In the long-run, all costs are variable. MC I 1 | Ye. of SwAKE AVC Di nh GALLONS OF SINA KEO GALLONS OF SNALE OIL

Explanation / Answer

Taking Output as 4 gallons then :

MC intersects the AVC and ATC at the bottom. Because of economies of scale and eventually diseconomies of scale, marginal costs fall as productivity increases. When productivity is at its maximum point marginal costs are at their minimum. When productivity starts to decline marginal costs start to rise. By definition, when marginal costs are less than average costs, the average declines. When marginal costs are greater than average costs, the average increases. Therefore, MC always intersects the AVC and ATC curves at their minimum points.

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