Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 90 80 70 60 ATC 50 40 30 AVC 20 MC O 10 20 30 40 50 60 70 80 90 QUANTITY (Thousands of shirts) 10 100 For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Produce or Shut Down? Profit or Loss? 15 20 25 55 70 85 COSTS (Dollars)
Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 90 80 70 60 ATC 50 40 30 AVC 20 MC O 10 20 30 40 50 60 70 80 90 QUANTITY (Thousands of shirts) 10 100 For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Produce or Shut Down? Profit or Loss? 15 20 25 55 70 85 COSTS (Dollars)
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 41P: Compute the average total cost, average variable cost, and marginal cost of producing 50 and 72...
Related questions
Question
![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: You are given more points to plot than you need.)
(?
100
06
Firm's Short-Run Supply
80
70
60
50
40
30
20
10
10
20
30
40
50
60
70
80
100
06
QUANTITY (Thousands of shirts)
Suppose there are 5 firms in this industry, each of which has the cost curves previously shown.
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: You are given more points to plot than you need.) Then, 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.
(?
100
Demand
90
Industry's Short-Run Supply
80
70
Equilibrium
60
50
30
20
10
50
100
150 200
250
300
350
400
450
500
QUANTITY (Thousands of shirts)
PRICE (Dollars per shirt)
PRICE (Dollars per shirt)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F724eb754-2b50-41ef-baeb-d9687acf2531%2Fdcd619e0-9483-424b-b8b9-1c47c963edda%2Fqpx14i8_processed.png&w=3840&q=75)
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: You are given more points to plot than you need.)
(?
100
06
Firm's Short-Run Supply
80
70
60
50
40
30
20
10
10
20
30
40
50
60
70
80
100
06
QUANTITY (Thousands of shirts)
Suppose there are 5 firms in this industry, each of which has the cost curves previously shown.
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: You are given more points to plot than you need.) Then, 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.
(?
100
Demand
90
Industry's Short-Run Supply
80
70
Equilibrium
60
50
30
20
10
50
100
150 200
250
300
350
400
450
500
QUANTITY (Thousands of shirts)
PRICE (Dollars per shirt)
PRICE (Dollars per shirt)
![Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable
cost (AVC) curves for a typical firm in the industry.
(?
100
06
80
70
60
ATC
50
40
30
AVC
20
+
MC O
10
10
20
30
40
50 60 70 80
90
100
QUANTITY (Thousands of shirts)
For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume
that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing
quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will
make a profit, suffer a loss, or break even at each price.
Price
Quantity
(Dollars per shirt)
(Shirts)
Produce or Shut Down?
Profit or Loss?
15
20
25
55
70
85
COSTS (Dollars)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F724eb754-2b50-41ef-baeb-d9687acf2531%2Fdcd619e0-9483-424b-b8b9-1c47c963edda%2F9lebaid_processed.png&w=3840&q=75)
Transcribed Image Text:Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable
cost (AVC) curves for a typical firm in the industry.
(?
100
06
80
70
60
ATC
50
40
30
AVC
20
+
MC O
10
10
20
30
40
50 60 70 80
90
100
QUANTITY (Thousands of shirts)
For each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume
that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing
quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will
make a profit, suffer a loss, or break even at each price.
Price
Quantity
(Dollars per shirt)
(Shirts)
Produce or Shut Down?
Profit or Loss?
15
20
25
55
70
85
COSTS (Dollars)
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