3. Profit maximization and loss minimization Suppose that the market for cashmere sweaters is a perfectly competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per sweater) 100 go 90 Ge 80 70 60 50 40 30 20 10 ATC AVC MC 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of sweaters) Profit or Loss In the short run, at a market price of $80 per sweater, this firm will choose to produce sweaters per day.

3. Profit maximization and loss minimization Suppose that the market for cashmere sweaters is a perfectly competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per sweater) 100 go 90 Ge 80 70 60 50 40 30 20 10 ATC AVC MC 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of sweaters) Profit or Loss In the short run, at a market price of $80 per sweater, this firm will choose to produce sweaters per day.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 1SCQ: Firms ill a perfectly competitive market are said to be price takers that is, once the market...

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