Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
20th Edition
ISBN: 9780077660819
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 11.6, Problem 1QQ
To determine
Price determination.
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The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal
revenue curve for a firm for different levels of output.
Price
R
W
S
L
0
A
F
B
G
C
M
At the profit-maximizing level of output:
MC
ATC
AVC
MR
Quantity
a. the firm is earning economic profit.
b. profits per unit are the highest relative to all other output choices.
c. profit equals ZC.
d. costs exceed revenue.
Price
Average total cost
AVC
Demand
Marginal
cost
Marginal revenue
Q
Quantity
Discuss the firm plotted on the figure. What type of firm do you see?is the firm operating at the optimal point of production? is the firm making a proht? s the firm operating in
the short or in the long run?
. A perfectly competitive, profit maximizing firm earns zero economic profit in the long run. The firm's
total cost is: TC = a + bQ?. Use only the cost curve given.
a. Determine mathematically the level of output the firm will produce in the long run.
Chapter 11 Solutions
Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
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