100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or 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 hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars) On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. 100 O 90 Industry's Short-Run Supply Demand 80 70 Equilibrium 60 50 30 20 10 0 0 40 80 120 160 200 240 280 320 360 400 QUANTITY (Thousands of shirts) in the short run. In the long run, At the current short-run market price, firms will 40 PRICE (Dollars per shirt)
100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or 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 hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars) On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. 100 O 90 Industry's Short-Run Supply Demand 80 70 Equilibrium 60 50 30 20 10 0 0 40 80 120 160 200 240 280 320 360 400 QUANTITY (Thousands of shirts) in the short run. In the long run, At the current short-run market price, firms will 40 PRICE (Dollars per shirt)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:100
90
80
70
60
ATC
50
40
30
20
AVC
МС О
10
+
0
0
5
10
15
20
30
35
40
45
50
QUANTITY (Thousands of shirts)
or 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
hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing
uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will
nake a profit, suffer a loss, or break even at each price.
Price
Quantity
(Dollars per shirt)
(Shirts)
Profit or Loss?
Produce or Shut Down?
Shut down
10
20,000
Loss
Shut down
20
10,000
Loss
Shut down
32
5,000
Loss
Either 0 or 37,500
Shut down
40
Loss
25
COSTS (Dollars)
Transcribed Image Text:On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that
corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus
symbol) on the graph to indicate the short-run equilibrium price and quantity in this market.
Note: Dashed drop lines will automatically extend to both axes.
100
O
90
Industry's Short-Run Supply
Demand
80
70
Equilibrium
60
50
30
20
10
0
0
40
80
120
160
200
240
280
320
360
400
QUANTITY (Thousands of shirts)
in the short run. In the long run,
At the current short-run market price, firms will
40
PRICE (Dollars per shirt)
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