Suppose at the level of output q = 100, the average variable cost is $7/unit, the marginal cost is $8/unit, the average total cost is $9/unit, and the price is $10/unit. Draw the cost (AVC, MC, AC) and marginal revenue curves for the firm and show where the firm is at q = 100. Use the diagram to answer the following questions: Is the firm making a positive profit or is it losing money (in the short run)? Explain with a reference to your diagram. Can the firm increase its profit (in the short run)? Explain with a reference to your diagram.

Suppose at the level of output q = 100, the average variable cost is $7/unit, the marginal cost is $8/unit, the average total cost is $9/unit, and the price is $10/unit. Draw the cost (AVC, MC, AC) and marginal revenue curves for the firm and show where the firm is at q = 100. Use the diagram to answer the following questions: Is the firm making a positive profit or is it losing money (in the short run)? Explain with a reference to your diagram. Can the firm increase its profit (in the short run)? Explain with a reference to your diagram.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter23: Profit Maximization

Section: Chapter Questions

Problem 1E

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