Answered: 2. Take the two firms below. Suppose…

2. Take the two firms below. Suppose the price of good x is $6. Calculate profit or loss for each firm. If the firm is making a loss, should they shut down or exit the market?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. Take the two firms below. Suppose the price of good x is $6. Calculate profit or loss for each
firm. If the firm is making a loss, should they shut down or exit the market?
SS
10
9
8
7
6
5
4
3
2
1
0
0
5
10
15
20
25
Good x
30
35
40
MC
AE
AC
45
50
$$
10
9
8
7
6
5
4
3
2
1
0
0
5
10
15
20
25
Good x
30
35
40
MC
45
AE
AC
50

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Step 3: Calculate the profit or loss for firm 2

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Consider a firm selling apples and the market for apples is perfectly competitive. The following table presents the costs of a firm. Use the given information to answer questions 35 - 42. Q AFC AVC ATC MC TC 1$300 $100 $400$100$400 2 150 75 225 50 3 100 70 170 60 4 75 72.5 147.5 80 5 60 80 140 11O| 6 50 90 140 140| Find the market price such that the firm's maximized profit = $0 Answer: The firm's maximized profit is $0 if the market price = $.