a) What is the equation for the firm's short-run marginal cost (SRMC) curve. Draw it on a graph with the marginal revenue (MR) curve. Calculate and mark on your graph the profit-maximizing q*. b) Write the equation for the short-run average total cost curve (SRATC) and solve for its value evaluated at q* (SRATC*). Draw the SRATC and mark SRATC* on your graph from part (a). c) Write the equation for the short-run average variable cost curve (SRAVC) and solve for its value evaluated at q* (SRAVC*). Draw the SRAVC and mark SRAVC* on your graph from part (a).
Consider the
a) What is the equation for the firm's short-run marginal cost (SRMC) curve. Draw it on a graph with the marginal revenue (MR) curve. Calculate and mark on your graph the profit-maximizing q*.
b) Write the equation for the short-run
c) Write the equation for the short-run
d) Calculate the firm’s economic profit when they produce at q*. Shade the area that represents profit on the graph you drew above.
e) Should this firm stay open or shut down in the short run? Explain your answer.
f) Based on what you know about this market, what should happen to the number of firms in this market and what will happen to the market price in the long run?
g) Calculate the long-run
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
