Draw a graph including AVC to illustrate a firm that is losing money, continues to operate, and minimizing its loss. Explain a situation in which a firm would want to produce at a loss, rather than not produce at all.
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- Using the graph attached, calculate the firm's profits at the profit maximizing output.The following graph shows the demand curve, as well as the AVC, ATC and MC curves of a company selling rolled oats in a perfectly competitive market. Use the graph to answer the questions. The goal of the company is to maximize its profit. How many boxes of rolled oats should it sell to attain this goal? What price will it charge? How much profit does this firm make per month? Will this company produce or shut down in the short run? Why? Will this firm exit the market for rolled oats in the long run or not? Why?Using the figure above, what is profit/loss for the firm?
- You've been hired by Goldilocks Bakeshop to calculate measures of costs and revenue. Given the data they have provided you with (see table), you are asked to compute the following: a. Total Revenue (TR) at each Quantity (Q) level b. Marginal Revenue (MR) c. Marginal Cost (MC) d. Profit at every quantity level Quantity Price Total cost Total Marginal Marginal cost Profit revenue revenue 10 5 12 3 15 5 19 5 24 30 7 45 5. 5) 5)Explain why a company would shut down in the short run.(1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…
- Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earn an accounting profit of $200 per acre. Is he currently earning an economic profit? Why or why not?Lisette owns a bakery. If she expands the size of her bakery but her average total cost of producing bread remains unchanged in the long run, what is Lisette experiencing?Compute the firm’s profit for A, B, and C and enter this data into the table.