For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.) Price (Dollars per candle) Quantity (Candles) Total Revenue Fixed Cost (Dollars) (Dollars) 10.00 44,000 16.00 44,000 44,000 Variable Cost (Dollars) Profit (Dollars) 40.00 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if it shuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per candle. 5. Profit maximization and shutting down in the short run Suppose that the market for candles is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per candle) 40 36 32 28 24 20 ATC 16 12 AVC 8 MC 4 0 0 2 4 6 8 10 12 14 16 18 20 QUANTITY (Thousands of candles) ?.
For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.) Price (Dollars per candle) Quantity (Candles) Total Revenue Fixed Cost (Dollars) (Dollars) 10.00 44,000 16.00 44,000 44,000 Variable Cost (Dollars) Profit (Dollars) 40.00 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if it shuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per candle. 5. Profit maximization and shutting down in the short run Suppose that the market for candles is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per candle) 40 36 32 28 24 20 ATC 16 12 AVC 8 MC 4 0 0 2 4 6 8 10 12 14 16 18 20 QUANTITY (Thousands of candles) ?.
Chapter10: Inventory
Section: Chapter Questions
Problem 2MC: If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle)...
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![For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that
quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down,
it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.)
Price
(Dollars per candle)
Quantity
(Candles)
Total Revenue
Fixed Cost
(Dollars)
(Dollars)
10.00
44,000
16.00
44,000
44,000
Variable Cost
(Dollars)
Profit
(Dollars)
40.00
If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if it
shuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease).
This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is
per candle.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F769b2bb9-738a-48b4-8b5b-ac5cb63ac8f7%2Fc755a49c-1661-4569-b1b0-f8ffb8465802%2F44n2a1r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that
quantity, using the data from the graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down,
it will produce. (Hint: You can select the purple points [diamond symbols] on the graph to see precise information on average variable cost.)
Price
(Dollars per candle)
Quantity
(Candles)
Total Revenue
Fixed Cost
(Dollars)
(Dollars)
10.00
44,000
16.00
44,000
44,000
Variable Cost
(Dollars)
Profit
(Dollars)
40.00
If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $44,000 per day. In other words, if it
shuts down, the firm would suffer losses of $44,000 per day until its fixed costs end (such as the expiration of a building lease).
This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is
per candle.
Transcribed Image Text:5. Profit maximization and shutting down in the short run
Suppose that the market for candles is a competitive market. The following graph shows the daily cost curves of a firm operating in this market.
PRICE (Dollars per candle)
40
36
32
28
24
20
ATC
16
12
AVC
8
MC
4
0
0
2
4
6
8
10 12
14
16
18
20
QUANTITY (Thousands of candles)
?.
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