The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm thatproduces children's mittens in a competitive market.Smitten's Production CostsQuantity (pairs of Marginal Costmittens)510152025303540Costs (dollars)109Smitten's marginal cost and average total cost curves are shown below.875m21(dollars)$1.502.0022.503.504.005.006.008.5034Smitten's Costs of Production5MCATCAverage Total Cost(dollars)$8.005.0010 15 20 25 30 35 40 45 50Quantity (pairs of mittens)4.504.004.004.505.005.50 Instructions: Enter your answer as a whole number.a. If the market price of children's mittens is $6.00 per pair, how many pairs of children's mittens should Smitten produce per week tomaximize its profits?pairs of mittensb. What is Smitten's average total cost at the profit-maximizing quantity of children's mittens?c. What are Smitten's weekly profits If the market price is $6.00 per pair and the firm produces the profit-maximizing quantity ofmittens?d. What are Smitten's weekly profits if the market price is $5.00 per pair and the firm produces the profit-maximizing quantity ofmittens?e. At what price would Smitten earn a normal profit?

MC is marginal cost which is the addition to total cost when an additional unit is produced.ATC is…

a. If the market price of children's mittens is $6.00 per pair, how many pairs of children's mittens should Smitten produce per week to maximize its profits? pairs of mittens b. What is Smitten's average total cost at the profit-maximizing quantity of children's mittens? c. What are Smitten's weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens? d. What are Smitten's weekly profits If the market price is $5.00 per pair and the firm produces the profit-maximizing quantity of mittens? e. At what price would Smitten earn a normal profit?

a. If the market price of children's mittens is $6.00 per pair, how many pairs of children's mittens should Smitten produce per week to maximize its profits? pairs of mittens b. What is Smitten's average total cost at the profit-maximizing quantity of children's mittens? c. What are Smitten's weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens? d. What are Smitten's weekly profits If the market price is $5.00 per pair and the firm produces the profit-maximizing quantity of mittens? e. At what price would Smitten earn a normal profit?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that
produces children's mittens in a competitive market.
Smitten's Production Costs
Quantity (pairs of Marginal Cost
mittens)
5
10
15
20
25
30
35
40
Costs (dollars)
10
9
Smitten's marginal cost and average total cost curves are shown below.
8
7
5
m
21
(dollars)
$1.50
2.00
2
2.50
3.50
4.00
5.00
6.00
8.50
34
Smitten's Costs of Production
5
MC
ATC
Average Total Cost
(dollars)
$8.00
5.00
10 15 20 25 30 35 40 45 50
Quantity (pairs of mittens)
4.50
4.00
4.00
4.50
5.00
5.50

Instructions: Enter your answer as a whole number.
a. If the market price of children's mittens is $6.00 per pair, how many pairs of children's mittens should Smitten produce per week to
maximize its profits?
pairs of mittens
b. What is Smitten's average total cost at the profit-maximizing quantity of children's mittens?
c. What are Smitten's weekly profits If the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of
mittens?
d. What are Smitten's weekly profits if the market price is $5.00 per pair and the firm produces the profit-maximizing quantity of
mittens?
e. At what price would Smitten earn a normal profit?

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Step 1: Define MC, ATC and perfect competition

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Step 2: To know the quantity produced at price $6:

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Step 3: To know ATC at profit maximizing quantity

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Step 4: To know profit

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Step 5: To know profit at price $5

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