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6. Deriving the short-run supply curve The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. COSTS (Dollar) 54 ATC ?

6. Deriving the short-run supply curve The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. COSTS (Dollar) 54 ATC ?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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6. Deriving the short-run supply curve The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. COSTS (Dollars) 80 56 24 0 D 8 8 12 36 48 60 0 Price (Dollars per lamp) 16 O 0 ATC AVC For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. 0 40 45 56 QUANTITY (Thousands of lamps) Quantity (Lamps) Produce or Shut Down? Profit or Loss? On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.)
Transcribed Image Text:6. Deriving the short-run supply curve The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. COSTS (Dollars) 80 56 24 0 D 8 8 12 36 48 60 0 Price (Dollars per lamp) 16 O 0 ATC AVC For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. 0 40 45 56 QUANTITY (Thousands of lamps) Quantity (Lamps) Produce or Shut Down? Profit or Loss? On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.)
On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) Ⓒ PRICE (Dolars per lamp) 80 64 PRICE (Dolars per lamp) 56 45 N 24 16 0 8 C 121 D 18 Suppose there are 9 firms in this industry, each of which has the cost curves previously shown. 8 8 On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) Next, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. D 16 32 40 56 QUANTITY (Thousands of lamps) 45 Demand Firm's Short-Run Supply 144 218 288 380 432 504 578 848 QUANTITY (Thousands of lamps) At the current short-run market price, firms will -0- Industry's Short-Run Supply Equilibrium in the short run. In the long run,
Transcribed Image Text:On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) Ⓒ PRICE (Dolars per lamp) 80 64 PRICE (Dolars per lamp) 56 45 N 24 16 0 8 C 121 D 18 Suppose there are 9 firms in this industry, each of which has the cost curves previously shown. 8 8 On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) Next, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. D 16 32 40 56 QUANTITY (Thousands of lamps) 45 Demand Firm's Short-Run Supply 144 218 288 380 432 504 578 848 QUANTITY (Thousands of lamps) At the current short-run market price, firms will -0- Industry's Short-Run Supply Equilibrium in the short run. In the long run,
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