Then, plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. Consider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and averagevariable cost (AVC) curves for a typical firm in the industry.(?10090807060ATC50403020AVC10МС+++101520253035404550QUANTITY OF OUTPUT (Thousands of shirts)PRICE AND COST PER UNIT (Dollars) For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assumethat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the loss-minimizingquantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it willmake a profit, suffer a loss, or break even at each price.PriceOutput(Dollars per shirt)(Shirts)Produce or Shut Down?Profit or Loss?1032405060

In a perfectly competitive market there are large number of firms producing similar and identical…

onsider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average ariable cost (AVC) curves for a typical firm in the industry. 100 90

onsider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average ariable cost (AVC) curves for a typical firm in the industry. 100 90

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Then, plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output.

Consider the perfectly competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average
variable cost (AVC) curves for a typical firm in the industry.
(?
100
90
80
70
60
ATC
50
40
30
20
AVC
10
МС
+
+
+
10
15
20
25
30
35
40
45
50
QUANTITY OF OUTPUT (Thousands of shirts)
PRICE AND COST PER UNIT (Dollars)

For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume
that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the loss-minimizing
quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will
make a profit, suffer a loss, or break even at each price.
Price
Output
(Dollars per shirt)
(Shirts)
Produce or Shut Down?
Profit or Loss?
10
32
40
50
60

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