Suppose that the market for dress shirts is a competitive market. The following

Question

Suppose that the market for dress shirts is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. In the short run, at a market price of $15 per shirt, this firm will choose to produce shirts per day. On the previous graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $15 and the firm chooses to produce the quantity you already. The area of this rectangle indicates that the firm's would be per day.

Explanation / Answer

8 units because equilibrium is where MR = MC. Mr is same as price in perfect competition which is 15 in this case.

At this price firm is making loss =TR - TC => (30-15) * 8 = 120 per day

30 is total cost at 8 units.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.