2) Profit Maximization (. Consider a perfectly competitive market for Widgets. Suppose the market determines a market price of $40 and total quantity of 1,000,000 units per month. At this price the firm finds its profit maximizing quantity is 80 units per month. Average Total Cost is $60 and Average Variable Cost is $45 at this quantity. Is this firm earning economics profits or losses? Calculate fixed costs, should this firm stay open (produce 80 units) or close (produce zero units) in the short run?

2) Profit Maximization (. Consider a perfectly competitive market for Widgets. Suppose the market determines a market price of $40 and total quantity of 1,000,000 units per month. At this price the firm finds its profit maximizing quantity is 80 units per month. Average Total Cost is $60 and Average Variable Cost is $45 at this quantity. Is this firm earning economics profits or losses? Calculate fixed costs, should this firm stay open (produce 80 units) or close (produce zero units) in the short run?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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My dear good expert hand written not allowed.

2) Profit Maximization (. *. Consider a perfectly
competitive market for Widgets. Suppose the market determines a
market price of $40 and total quantity of 1,000,000 units per
month. At this price the firm finds its profit maximizing quantity
is 80 units per month. Average Total Cost is $60 and Average
Variable Cost is $45 at this quantity. Is this firm earning
economics profits or losses? Calculate fixed costs, should this
firm stay open (produce 80 units) or close (produce zero units) in
the short run?

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