ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:Consider the graph of demand (D), marginal revenue (MR), marginal cost (MC), average total cost (ATC), and average
variable cost (AVC) for a monopolistically competitive firm.
Please point E to label the profit-maximizing price and quantity for the firm.
Price ($)
10
9
8
7
6
4
3
2
1
0
0
K
MR
10
20
MC
30
ATC AVC
E
D
40 50 60 70 80 90 100
Quantity
![Price ($)
9
8
7
6
4
3
2
1
0
0
10 20 30
MR
MC
ATC AVC
[T]
E
D
40 50 60 70 80 90 100
Quantity
If the goal of the firm is to maximize profit, how much will it produce, and what price will it charge?
The firm will produce 40 units, and charge a price of $5.
The firm will produce 30 units, and charge a price of $6.
The firm will shut down in the short run because it is unable to cover its average variable costs.
The firm will produce 30 units, and charge a price of $3.](https://content.bartleby.com/qna-images/question/d931d8f8-aefa-43cb-93a4-cdea2af9ca00/d372b696-2160-4fc9-b251-1307ee86f563/k7imv1m_processed.png)
Transcribed Image Text:Price ($)
9
8
7
6
4
3
2
1
0
0
10 20 30
MR
MC
ATC AVC
[T]
E
D
40 50 60 70 80 90 100
Quantity
If the goal of the firm is to maximize profit, how much will it produce, and what price will it charge?
The firm will produce 40 units, and charge a price of $5.
The firm will produce 30 units, and charge a price of $6.
The firm will shut down in the short run because it is unable to cover its average variable costs.
The firm will produce 30 units, and charge a price of $3.
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- The graph below shows cost and revenue curves for a monopolistic competitor producing different amounts of chairs. On the graph, suppose that: A = $55, B = $21, C = $15, E = $7, F = 13, and G = 31 Price BL BCE CP MC ATC EH MR F G Quantity Calculate the maximum profit the firm can earnarrow_forwardThe graph depicts a monopolistically competitive firm. Assuming the firm's ATC is ATC', the firm's current economic profit (per day) is_____, and its long-run economic profit is _____. Price and cost $40 30 23 20 10 0 $3,000; $0 $1,500; $0 $1,500; $2,500 $4,000; $3,000 MR 150 200 MC ATC ATC AR=D Quantity (per day)arrow_forwardThe figure below depicts a monopolistically competitive firm operating in the short run. Label the diagram with the items listed to the right of the figure. You will have to decide whether the firm is making a profit or a loss. Profit Price 8 25 OF 50 QUESTIONS COMPLETED -> At ед MR MC Quantity D ATC C Loss Average total cost Profit- maximizing price Profit- maximizing output SUBMIT ANSWEarrow_forward
- explain the relationship between the market price and a monopolistically competitive firm’s marginal revenue, be able to find the profit-maximizing output and pricearrow_forwardAnswering all questions compulsory...arrow_forwardThe table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a monopolistic firm producing different quantities of chocolate gift boxes. Fill in the blanks in the table. Quantity 0 5 10 15 20 25 30 Price $22 20 16 14 12 10 Profit Profit-maximizing quantity Profit-maximizing price 18 Total Revenue 50 100 180 240 280 300 300 Total Cost $50 55 57.5 62.5 72.5 122.5 Marginal Cost Marginal Revenue $1 0.5 2 4 6 1 10 12 8 Instructions: Enter your answers as whole numbers. For profit, round your answer to 2 decimal places. 0 20arrow_forward
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