Consider the information of Firm C on the attached figure and answer the following: Calculate TVC and Ceteris paribus, if the price falls below_________, Firm C will have to shut down and exit the market Ceteris paribus, Firm C will make a normal profit at the price of________ Firm C achieves an allocative efficient level of output by producing_______ units of output.
Consider the information of Firm C on the attached figure and answer the following: Calculate TVC and Ceteris paribus, if the price falls below_________, Firm C will have to shut down and exit the market Ceteris paribus, Firm C will make a normal profit at the price of________ Firm C achieves an allocative efficient level of output by producing_______ units of output.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Consider the information of Firm C on the attached figure and answer the following:
- Calculate TVC and Ceteris paribus, if the
price falls below_________, Firm C will have to shut down and exit the market - Ceteris paribus, Firm C will make a normal profit at the price of________
- Firm C achieves an
allocative efficient level of output by producing_______ units of output.
Transcribed Image Text:Firm A
Firm B
Firm C
Price where output is equal to zero (R)
2000
1500
60
Profit maximising price (R)
1000
?
60
Profit maximising output level (units)
30
50
2500
MC at profit maximising output level (R)
?
275
60
ATC at profit maximising output level (R)
1300
?
36
AVC at profit maximising output level (R)
900
300
?
Minimum ATC (R)
1200
320
30
Minimum AVC (R)
800
280
3
Price at allocative efficient output level (R)
160
580
?
Allocative efficient level of output (units)
150
200
2500
Lerner index
0.8
?
Total Fixed Cost (R)
2000
75000
Total Variable Cost at profit maximising output level (R)
27000
15000
?
Mark-up
?
4
Expert Solution
Introduction
When the price falls below the minimum of the average variable cost then the firm has to shut down.
Normal profit is when price equals a minimum of the average total cost.
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