Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm’s total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.)PriceQuantityTotal RevenueFixed CostVariable CostProfit(Dollars per instant pot)(Instant pots)(Dollars)(Dollars)(Dollars)(Dollars)25.00 1,600,000 70.00 1,600,000 100.00 1,600,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it shuts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease).This firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per instant pot. The following graph plots daily cost curves for a firm operating in the competitive market for instant pots.PRICE (Dollars per instant pot)1009080706050403020100+05MCATCAVC+10 15 20 25 30 35 40QUANTITY (Thousands of instant pots)4550(?)

A competitive market is a structure where no single consumer or producer has the ability to…

Answered: Using the following table, for each…

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm’s total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.)

Price	Quantity	Total Revenue	Fixed Cost	Variable Cost	Profit
(Dollars per instant pot)	(Instant pots)	(Dollars)	(Dollars)	(Dollars)	(Dollars)
25.00			1,600,000
70.00			1,600,000
100.00			1,600,000

If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it shuts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease).

This firm's shutdown price—that is, the price below which it is optimal for the firm to shut down—is per instant pot.

The following graph plots daily cost curves for a firm operating in the competitive market for instant pots.
PRICE (Dollars per instant pot)
100
90
80
70
60
50
40
30
20
10
0
+
0
5
MC
ATC
AVC
+
10 15 20 25 30 35 40
QUANTITY (Thousands of instant pots)
45
50
(?)

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