**Exhibit HW2.4: Total Revenues and Total Costs for a Representative Competitive Firm** The graph displays the relationship between total revenue (TR) and total cost (TC) for a firm. It plots the money against the quantity (Q) produced. The key points on the graph are labeled for clarity: - **C61, C6, C5, C4, C3, C2, C1, TFC**: These are cost points on the vertical axis. - **Q1, Q2, Q3, Q4, Q**: These indicate different quantities produced on the horizontal axis. **Graph Explanation:** - **TR (Total Revenue)**: The straight line labeled TR increases with quantity, representing the total revenue earned by selling a certain quantity of product. - **TC (Total Cost)**: The upward-sloping curve labeled TC represents the total costs the firm incurs at different levels of output. **Intersection Points:** - Point **D**: Where TR and TC intersect for the first time. - Point **E**: Where TC surpasses TR, indicating losses beyond this point. **Cost Labels:** - **TFC** = $1.60 (Total Fixed Cost) - **C1** = $4.00 - **C2** = $8.20 - **C3** = $10.00 - **C4** = $11.20 - **C5** = $16.00 - **C6** = $22.00 - **C61** = $30.40 **Quantity Labels:** - **Q1** = 2 - **Q2** = 5 - **Q3** = 8 - **Q4** = 11 Underneath the graph, there is a question regarding average variable cost: "Refer to Exhibit HW2.4. If output is Q3, average variable cost is about ________." Options provided: - $1.12 - $1.10 - $1.22 - $1.20 This exhibit is used to illustrate the concepts of total revenue, total cost, and decision-making in a competitive firm regarding profit maximization and cost analysis.
**Exhibit HW2.4: Total Revenues and Total Costs for a Representative Competitive Firm** The graph displays the relationship between total revenue (TR) and total cost (TC) for a firm. It plots the money against the quantity (Q) produced. The key points on the graph are labeled for clarity: - **C61, C6, C5, C4, C3, C2, C1, TFC**: These are cost points on the vertical axis. - **Q1, Q2, Q3, Q4, Q**: These indicate different quantities produced on the horizontal axis. **Graph Explanation:** - **TR (Total Revenue)**: The straight line labeled TR increases with quantity, representing the total revenue earned by selling a certain quantity of product. - **TC (Total Cost)**: The upward-sloping curve labeled TC represents the total costs the firm incurs at different levels of output. **Intersection Points:** - Point **D**: Where TR and TC intersect for the first time. - Point **E**: Where TC surpasses TR, indicating losses beyond this point. **Cost Labels:** - **TFC** = $1.60 (Total Fixed Cost) - **C1** = $4.00 - **C2** = $8.20 - **C3** = $10.00 - **C4** = $11.20 - **C5** = $16.00 - **C6** = $22.00 - **C61** = $30.40 **Quantity Labels:** - **Q1** = 2 - **Q2** = 5 - **Q3** = 8 - **Q4** = 11 Underneath the graph, there is a question regarding average variable cost: "Refer to Exhibit HW2.4. If output is Q3, average variable cost is about ________." Options provided: - $1.12 - $1.10 - $1.22 - $1.20 This exhibit is used to illustrate the concepts of total revenue, total cost, and decision-making in a competitive firm regarding profit maximization and cost analysis.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Transcribed Image Text:**Exhibit HW2.4: Total Revenues and Total Costs for a Representative Competitive Firm**
The graph displays the relationship between total revenue (TR) and total cost (TC) for a firm. It plots the money against the quantity (Q) produced. The key points on the graph are labeled for clarity:
- **C61, C6, C5, C4, C3, C2, C1, TFC**: These are cost points on the vertical axis.
- **Q1, Q2, Q3, Q4, Q**: These indicate different quantities produced on the horizontal axis.
**Graph Explanation:**
- **TR (Total Revenue)**: The straight line labeled TR increases with quantity, representing the total revenue earned by selling a certain quantity of product.
- **TC (Total Cost)**: The upward-sloping curve labeled TC represents the total costs the firm incurs at different levels of output.
**Intersection Points:**
- Point **D**: Where TR and TC intersect for the first time.
- Point **E**: Where TC surpasses TR, indicating losses beyond this point.
**Cost Labels:**
- **TFC** = $1.60 (Total Fixed Cost)
- **C1** = $4.00
- **C2** = $8.20
- **C3** = $10.00
- **C4** = $11.20
- **C5** = $16.00
- **C6** = $22.00
- **C61** = $30.40
**Quantity Labels:**
- **Q1** = 2
- **Q2** = 5
- **Q3** = 8
- **Q4** = 11
Underneath the graph, there is a question regarding average variable cost:
"Refer to Exhibit HW2.4. If output is Q3, average variable cost is about ________."
Options provided:
- $1.12
- $1.10
- $1.22
- $1.20
This exhibit is used to illustrate the concepts of total revenue, total cost, and decision-making in a competitive firm regarding profit maximization and cost analysis.
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