Price and cost (dollars) 20 15.75 21 6,000 A B 8,000 SMC 1000 ATC AVC D-MR-$20 Quantity The above graph is for a perfectly competitive firm. The curve labelled "SMC " is the Marginal Cost curve, D-Demand and Marginal Revenue curve, ATC-average total cost curve, AVC is the average variable cost curve. (a) What is the profit maximizing price and output? (b) At the profit maximizing price and output what is the average total cost and average variable cost and average fixed cost? (c) At the profit maximizing price and output what is the amount of profit earned by this firm? (d) At what price would the firm earn zero profit (or loss)?
Price and cost (dollars) 20 15.75 21 6,000 A B 8,000 SMC 1000 ATC AVC D-MR-$20 Quantity The above graph is for a perfectly competitive firm. The curve labelled "SMC " is the Marginal Cost curve, D-Demand and Marginal Revenue curve, ATC-average total cost curve, AVC is the average variable cost curve. (a) What is the profit maximizing price and output? (b) At the profit maximizing price and output what is the average total cost and average variable cost and average fixed cost? (c) At the profit maximizing price and output what is the amount of profit earned by this firm? (d) At what price would the firm earn zero profit (or loss)?
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 41P: A computer company produces affordable, easy-to-use home computer systems and has fixed costs of...
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