1. Complete the table below. Quantity TCC TVC TC MC AVC ATC 012345678102S 12 0 -- -- -- 12 20 12 46 12 16 12 20 20 12 20 12 22 12 24 12 26 9 12 28 12 30 12 32 12 34 2. Using the table above, create a graph with Quantity on the horizontal axis and dollars on the vertical axis showing the curves for MC, AVC, and ATC. Make 3 copies of this graph for use in problems 3, 4, and 3. Suppose that the firm is a price taking firm competing in a market where the equilibrium price of the product is $18 per unit. Using one of the graphs you copied from question 2, draw in the firm's marginal revenue, average revenue, and market price line. Assuming the firm produces the quantity where MR=MC, designate rectangles for: total revenue, total cost, and total variable cost. Explain, in terms of the relative sizes of the total revenue and total variable cost rectangles, why the firm should continue to operate in the short-run. Designate on the graph the area that represents the loss that the firm incurs if it produces where MR=MC. If circumstances remain the same, can the firm continue to operate in the long-run? 4. Suppose that the firm is a price taking firm competing in a market where the equilibrium price of the product is $14 per unit. Using one of the graphs you copied from question 2, draw in the firm's marginal revenue, average revenue, and market price line. Assuming the firm produced the quantity where MR=MC, designate rectangles for: total revenue, total cost, and total variable cost. Explain, in terms of the relative sizes of the total revenue and total variable cost rectangles, why the firm should NOT continue to operate in the short-run. Designate on the graph the area that represents the loss that the firm incurs if it produces where MR=MC. 5. Suppose that the firm is a price taking firm competing in a market where the equilibrium price of the product is $26 per unit. Using one of the graphs you copied from question 2, draw in the firm's marginal revenue, average revenue, and market price line. Assuming the firm produces the quantity where MR=MC, designate rectangles for: total revenue, total cost, and profit.

1. Complete the table below. Quantity TCC TVC TC MC AVC ATC 012345678102S 12 0 -- -- -- 12 20 12 46 12 16 12 20 20 12 20 12 22 12 24 12 26 9 12 28 12 30 12 32 12 34 2. Using the table above, create a graph with Quantity on the horizontal axis and dollars on the vertical axis showing the curves for MC, AVC, and ATC. Make 3 copies of this graph for use in problems 3, 4, and 3. Suppose that the firm is a price taking firm competing in a market where the equilibrium price of the product is $18 per unit. Using one of the graphs you copied from question 2, draw in the firm's marginal revenue, average revenue, and market price line. Assuming the firm produces the quantity where MR=MC, designate rectangles for: total revenue, total cost, and total variable cost. Explain, in terms of the relative sizes of the total revenue and total variable cost rectangles, why the firm should continue to operate in the short-run. Designate on the graph the area that represents the loss that the firm incurs if it produces where MR=MC. If circumstances remain the same, can the firm continue to operate in the long-run? 4. Suppose that the firm is a price taking firm competing in a market where the equilibrium price of the product is $14 per unit. Using one of the graphs you copied from question 2, draw in the firm's marginal revenue, average revenue, and market price line. Assuming the firm produced the quantity where MR=MC, designate rectangles for: total revenue, total cost, and total variable cost. Explain, in terms of the relative sizes of the total revenue and total variable cost rectangles, why the firm should NOT continue to operate in the short-run. Designate on the graph the area that represents the loss that the firm incurs if it produces where MR=MC. 5. Suppose that the firm is a price taking firm competing in a market where the equilibrium price of the product is $26 per unit. Using one of the graphs you copied from question 2, draw in the firm's marginal revenue, average revenue, and market price line. Assuming the firm produces the quantity where MR=MC, designate rectangles for: total revenue, total cost, and profit.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 7SCQ: Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at...

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