3. Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). Information Price: $4 Elasticity of demand at price of $4 is Ed=-1 Quantity of output: 2000 Total variable cost: 4000 Average fixed cost: 1 Marginal cost is constant and equal to the average variable cost: MC=AVC=2.

3. Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). Information Price: $4 Elasticity of demand at price of $4 is Ed=-1 Quantity of output: 2000 Total variable cost: 4000 Average fixed cost: 1 Marginal cost is constant and equal to the average variable cost: MC=AVC=2.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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