### Perfect Competition Practice ExerciseThe provided image contains four economic diagrams labeled A, B, C, and D, each illustrating different scenarios in a perfectly competitive market. Each graph includes various curves and lines that represent important economic concepts. Here's a detailed explanation of each element:#### Common Elements Across Diagrams:- **D (MR = Price):** This line represents the demand curve, which is perfectly elastic in perfect competition. It also serves as the marginal revenue (MR) and price line.- **MC (Marginal Cost):** This curve shows the additional cost of producing one more unit.- **ATC (Average Total Cost):** This curve represents the total cost per unit of output.- **AVC (Average Variable Cost):** This curve illustrates the variable cost per unit of output.#### Analytical Tasks:For each diagram, determine the following:1. **Lowest Cost Per Unit:** Find the point on the ATC curve where it is at its minimum.2. **Cost Per Unit:** Identify where the price line intersects the ATC curve.3. **Total Revenue:** Calculate by multiplying the price by the quantity of output.4. **Profit or Loss:** Determine the difference between total revenue and total cost.5. **Break-even Point:** Find where total revenue equals total cost.6. **Profit-Maximizing Quantity:** Locate the quantity where MR equals MC.7. **Shutdown Point:** Identify where the price is equal to the minimum of the AVC curve.#### Graph Layout:- **Diagram A:** Contains lines and curves intersecting at various points, which represent different economic decisions a firm might face.- **Diagram B:** Examines a scenario where the AVC and ATC behave differently than in A, influencing shutdown and profitability.- **Diagram C:** Offers a situation where the MC curve intersects other curves at different quantities.- **Diagram D:** Represents another possible configuration of curves in a competitive market.These diagrams are used to practice identifying key points in the analysis of perfect competition, including profit-maximizing output, assessing profit or loss scenarios, and determining when a firm should shut down.#### Additional Notes:Handwriting notes on the image indicate that this practice exercise is part of coursework, with the name "Ann Horowitz" noted alongside the date "4-14."

Answered: Image /qna-images/answer/ab3c3a17-1d5c-4238-987a-2c00e971bfab.jpg

Dollars Per Unit B A 2 N O F Dollars Per Unit Y MC H I 4-14 S PERFECT COMPETITION PRACTICE EXERCISE MC IR ATC AVC ·D=MR ATC AVC -D=MR Dollars Per Unit L &H L . Dollars Per Unit с N H T M J O MC F MC ATC AVC FOR EACH OF THE DIA 1. Total Cost 2, Cost Per Unit 3. Price 4. Total Revenue 5. Quantity 6. Profit -D-MR 7. Breakeven Point & Shutdown Point ATC AVC DAMA

Dollars Per Unit B A 2 N O F Dollars Per Unit Y MC H I 4-14 S PERFECT COMPETITION PRACTICE EXERCISE MC IR ATC AVC ·D=MR ATC AVC -D=MR Dollars Per Unit L &H L . Dollars Per Unit с N H T M J O MC F MC ATC AVC FOR EACH OF THE DIA 1. Total Cost 2, Cost Per Unit 3. Price 4. Total Revenue 5. Quantity 6. Profit -D-MR 7. Breakeven Point & Shutdown Point ATC AVC DAMA

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

### Perfect Competition Practice Exercise

The provided image contains four economic diagrams labeled A, B, C, and D, each illustrating different scenarios in a perfectly competitive market. Each graph includes various curves and lines that represent important economic concepts. Here's a detailed explanation of each element:

#### Common Elements Across Diagrams:

- **D (MR = Price):** This line represents the demand curve, which is perfectly elastic in perfect competition. It also serves as the marginal revenue (MR) and price line.
- **MC (Marginal Cost):** This curve shows the additional cost of producing one more unit.
- **ATC (Average Total Cost):** This curve represents the total cost per unit of output.
- **AVC (Average Variable Cost):** This curve illustrates the variable cost per unit of output.

#### Analytical Tasks:

For each diagram, determine the following:
1. **Lowest Cost Per Unit:** Find the point on the ATC curve where it is at its minimum.
2. **Cost Per Unit:** Identify where the price line intersects the ATC curve.
3. **Total Revenue:** Calculate by multiplying the price by the quantity of output.
4. **Profit or Loss:** Determine the difference between total revenue and total cost.
5. **Break-even Point:** Find where total revenue equals total cost.
6. **Profit-Maximizing Quantity:** Locate the quantity where MR equals MC.
7. **Shutdown Point:** Identify where the price is equal to the minimum of the AVC curve.

#### Graph Layout:

- **Diagram A:** Contains lines and curves intersecting at various points, which represent different economic decisions a firm might face.
- **Diagram B:** Examines a scenario where the AVC and ATC behave differently than in A, influencing shutdown and profitability.
- **Diagram C:** Offers a situation where the MC curve intersects other curves at different quantities.
- **Diagram D:** Represents another possible configuration of curves in a competitive market.

These diagrams are used to practice identifying key points in the analysis of perfect competition, including profit-maximizing output, assessing profit or loss scenarios, and determining when a firm should shut down.

#### Additional Notes:

Handwriting notes on the image indicate that this practice exercise is part of coursework, with the name "Ann Horowitz" noted alongside the date "4-14."

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