ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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10

The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a firm are shown
in the figure below. The market price is $10.
a. What is the firm's marginal revenue? $
b. What is the firm's profit-maximizing output level?
units
c. What is the firm's profit (or loss) per unit at this
level of output? $
(use a
negative sign for losses)
What is its total profit (or loss) at this level of
output?
(again, use a
negative sign for losses)
Price/Cost
$50
$40
$30
$20
$10
0
10
20
30
Quantity
d. Will this firm produce in the short-run? Why or why not?
MC
40
ATC
P- $10
e: Briefly describe what will happen in the long run, using the same details we saw in Question 5. Will
this firm stay in business? Will it earn a profit in the long-run? What will happen to the number of
firms in the industry? What about the market price?
AVC
50
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Transcribed Image Text:The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a firm are shown in the figure below. The market price is $10. a. What is the firm's marginal revenue? $ b. What is the firm's profit-maximizing output level? units c. What is the firm's profit (or loss) per unit at this level of output? $ (use a negative sign for losses) What is its total profit (or loss) at this level of output? (again, use a negative sign for losses) Price/Cost $50 $40 $30 $20 $10 0 10 20 30 Quantity d. Will this firm produce in the short-run? Why or why not? MC 40 ATC P- $10 e: Briefly describe what will happen in the long run, using the same details we saw in Question 5. Will this firm stay in business? Will it earn a profit in the long-run? What will happen to the number of firms in the industry? What about the market price? AVC 50
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