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. 100 90 80 70 60 50 ATC 40 30 20 10 0 0 5 AVC MOD 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of lamps) 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. Price (Dollars per lamp) 10 20 32 40 50 60 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.) 888288 100 90 80 70 60 50 40 30 20 10 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of lamps) Firm's Short-Run Supply Suppose there are 5 firms in this industry, each of which has the cost curves previously shown
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. 100 90 80 70 60 50 ATC 40 30 20 10 0 0 5 AVC MOD 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of lamps) 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. Price (Dollars per lamp) 10 20 32 40 50 60 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.) 888288 100 90 80 70 60 50 40 30 20 10 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of lamps) Firm's Short-Run Supply Suppose there are 5 firms in this industry, each of which has the cost curves previously shown
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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.
100
90
80
70
60
50
ATC
40
30
20
10
0
0
5
AVC
MOD
10 15 20 25 30 35 40 45 50
QUANTITY (Thousands of lamps)
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.
Price
(Dollars per lamp)
10
20
32
40
50
60
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.)
888288
100
90
80
70
60
50
40
30
20
10
0
5
10 15 20 25 30 35 40 45 50
QUANTITY (Thousands of lamps)
Firm's Short-Run Supply
Suppose there are 5 firms in this industry, each of which has the cost curves previously shown
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