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The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry.       a) At the optimal output, what price will Do Drop In charge and what will be its output?   Price: $    Output:  units   b) At the optimal price and output, what will be its total revenue, total cost, and total loss?   TR: $  ; TC: $    Total loss: $    c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level?

The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry.       a) At the optimal output, what price will Do Drop In charge and what will be its output?   Price: $    Output:  units   b) At the optimal price and output, what will be its total revenue, total cost, and total loss?   TR: $  ; TC: $    Total loss: $    c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry.

 

 

 

a) At the optimal output, what price will Do Drop In charge and what will be its output?

 

Price: $ 

 

Output:  units

 

b) At the optimal price and output, what will be its total revenue, total cost, and total loss?

 

TR: $  ; TC: $ 

 

Total loss: $ 

 

c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level? 

 

AVC must be less than $  .

20 18 MC 16 AC 14 12 10 8 6 D 4 MR 60 120 180 240 300 360 420 Quantity per period Cost and revenues (in dollars)
Transcribed Image Text:20 18 MC 16 AC 14 12 10 8 6 D 4 MR 60 120 180 240 300 360 420 Quantity per period Cost and revenues (in dollars)
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