The green line in the graph below represents a firm's long-run average cost without advertising, while the red line represents being with advertising. In a scenario where a firm runs advertising but it doesn't work or pay off, assuming they start at point A, where would a failed advertising campaign result? Cost Per Dish 3.50 (dollars) O Point C O Point B O Point A C 3.00 No point 2.50 2.00 1.50 1.00 0.50 A With advertising LRAC2 B LRAC₁ Without advertising 0 2 4 6 8 10 12 14 16 18 20 22 24 Quantity of Frozen Yogurt (thousands of dishes per month)

The green line in the graph below represents a firm's long-run average cost without advertising, while the red line represents being with advertising. In a scenario where a firm runs advertising but it doesn't work or pay off, assuming they start at point A, where would a failed advertising campaign result? Cost Per Dish 3.50 (dollars) O Point C O Point B O Point A C 3.00 No point 2.50 2.00 1.50 1.00 0.50 A With advertising LRAC2 B LRAC₁ Without advertising 0 2 4 6 8 10 12 14 16 18 20 22 24 Quantity of Frozen Yogurt (thousands of dishes per month)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 7PA

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Don't use chatgpt or any AI A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
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