**Chapter 14: Profit-Maximizing Firm's Total Revenue**1. When the market price is P3, a profit-maximizing firm's total revenue: - a. can be represented by the area P3 × Q3. - b. can be represented by the area P3 × Q2. - c. can be represented by the area (P3 - P2) × Q3. - d. is zero. **Figure 14-1***Suppose a firm operating in a competitive market has the following cost curves:*The diagram presented is an economic graph illustrating cost curves for a firm in a perfectly competitive market. The graph's axes are labeled with "Price" on the vertical axis and "Quantity" on the horizontal axis.Key features of the graph:1. **Curves:** - **MC (Marginal Cost):** This curve is upward sloping, reflecting the additional cost of producing one more unit of output. - **ATC (Average Total Cost):** This curve is U-shaped, representing the cost per unit produced, including both fixed and variable costs, averaged over the quantity produced. - **AVC (Average Variable Cost):** This curve lies below the ATC and is also U-shaped, indicating the variable cost per unit of output.2. **Horizontal Lines:** - Horizontal dashed lines are drawn at different price levels: P1, P2, P3, P4, and P5.3. **Vertical Lines:** - Vertical dashed lines extend from points on the quantity axis, labeled Q1, Q2, Q3, and Q4, up to the intersection with the ATC or AVC curves, illustrating various levels of outputs where cost curves interact with specific price levels.This visual representation helps in analyzing the behavior of costs relative to output levels, which is crucial for determining firm behavior in competitive markets.

And for a price taker firm the profit maximizing condition is : P = MC Total revenue by selling Q…

Answered: Chapter 14 a. can be represented by the…

Chapter 14 a. can be represented by the area P3 x Q3. b. can be represented by the area P3 x Q2. c. can be represented by the area (P3-P2) × Q3. d. is zero.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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