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220 MC 200- 180- 160- 140- 120- 100- 80 00 60 40 40 20 20 0 2 4 8 8 MR ATC D די 10 12 14 16 18 20 22 24 26 Quantity

220 MC 200- 180- 160- 140- 120- 100- 80 00 60 40 40 20 20 0 2 4 8 8 MR ATC D די 10 12 14 16 18 20 22 24 26 Quantity

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 18RQ: What is deflation?
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Question
The horizontal axis labeled quantity ranges from 0 to 26 in increments of 2. The vertical axis labeled dollar ranges from 0 to 220 in increments of 20. A line labeled M R begins at the point (0, 200) goes down to the right and ends at the point (10, 0). A second line labeled D begins at the point (0, 200) goes down to the right and ends at the point (20, 0). An upward-facing curve labeled M C begins at the point (3, 85) goes down to the right with decreasing steepness to a low point at (7, 60) then goes up to the right with increasing steepness to end at the point (18, 200). A second upward-facing curve labeled A T C begins at the point (4, 150) goes down to the right with decreasing steepness to a low point at (12, 85) then goes up to the right with increasing steepness to end at the point (21, 160). The curve M C intersects the line M R at (7, 60), the line D at (12, 85) and the curve A T C at (12, 85). All values are approximated."

 

a. What is the firm’s optimal output?

 

 units

 

b. What is the firm’s optimal price?

 

$ 

 

c. What are the firm’s maximum profits?

 

$ 

 

d. What adjustments should the manager be anticipating?

 

multiple choice

  • Demand will increase over time as firms exit the market.
  • Demand will remain unchanged over time.
  • Demand will decrease over time as new firms enter the market.
220 MC 200- 180- 160- 140- 120- 100- 80 00 60 40 40 20 20 0 2 4 8 8 MR ATC D די 10 12 14 16 18 20 22 24 26 Quantity
Transcribed Image Text:220 MC 200- 180- 160- 140- 120- 100- 80 00 60 40 40 20 20 0 2 4 8 8 MR ATC D די 10 12 14 16 18 20 22 24 26 Quantity
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