a. The profit-maximizing price is $________ and the firm should produce _______u
ID: 1223878 • Letter: A
Question
a. The profit-maximizing price is $________ and the firm should produce _______units of output.
b. The elasticity of demand at the profit-maximizing point on demand is __________ (elastic, inelastic, unit elastic), as it must be for profit maximization to occur. Total revenue ________ (is, is not) maximized at this point on demand.
c. The maximum possible profit for this firm is $___________________ (indicate a loss with a negative sign).
d. The firm __________________ (should, should not) shut down in the short run because it would lose $____________ if it shut down.
60 50 SMC 40 30 ATC AVC 20 10 0 1,000 2,000 4,000 5,000 6,000 7,000 8,000 Quantity MRExplanation / Answer
The profit maximising price is $ 40 and when the firm should produce 4000 units because at that point MR=MC
B) The elasticity of demand at the profit maximising point on demand is elastic as it must be for profit maximising to be occur. Total revenue is maximising at that point.
C) the ATC is $15 and if the ATC is lower than the price then the loss will happen so the firm will decide to shut down the firm.
D) the firm should shut down in the short run because it would loss $35 if it shut down
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