Firm B operates in a perfectly competitive market. Use the graph below to answer

ID: 1209528 • Letter: F

Question

Firm B operates in a perfectly competitive market. Use the graph below to answer the following and determine what should this firm do in the short-run and in the long-run?

Price (P)=

Average Variable Cost (AVC)=

Profit maximizing Quantity (Q) =

Total Variable Cost (TVC)=

Total Revenue (TR) =

Total Fixed Cost (TFC) =

Average Total Cost (ATC) =

Profit/Loss =

Total Cost (TC)=

Operating Profit =

Price (P)=

Average Variable Cost (AVC)=

Profit maximizing Quantity (Q) =

Total Variable Cost (TVC)=

Total Revenue (TR) =

Total Fixed Cost (TFC) =

Average Total Cost (ATC) =

Profit/Loss =

Total Cost (TC)=

Operating Profit =

Explanation / Answer

Price (P)= 7 according to demand curve

Average Variable Cost (AVC)= 6 according to AVC curve

Profit maximizing Quantity (Q) = 150 where MR = MC

Total Variable Cost (TVC)= AVC x Q = 6 x 150 => 900

Total Revenue (TR) = PxQ = 7 x 150 = 1050

Total Fixed Cost (TFC) = TC - TVC => 1650 - 900 = 750

Average Total Cost (ATC) = 11 according to ATC curve

Profit/Loss = TR - TC = 1050 - 1650 = -600 is loss

Total Cost (TC) = Cx Q => 11 x 150 =1650

Operating Profit = TR - TVC = 1050 - 900 = 150