f. Finally, label the area that shows the net change in welfare. Is this a net positive or a net negative? brognor o 4. Consider a profit-maximizing, perfectly-competitive firm in the short run. a. Carefully define what we mean by the short run. bis () dillup ano hdili b. Draw a diagram for this firm using the more realistic or complicated case (where the law of diminishing returns does not begin immediately) consisting of an average variable cost curve (AVC), an average total cost curve (ATC), and a marginal cost curve (MC). muindiliups c. In this diagram, draw in a price (P) or marginal revenue (MR) line for which the firm is earning positive economic profits. Carefully label the profit rectangle. pisric d. In a new diagram, draw in a P/MR line for which the firm is earning negative s economic profits but positive profits on operation. Carefully label the profits on operation rectangle. 100 od bas e. For the diagram in 4d, please carefully explain why the firm might continue to produce despite the negative profits. wode bns 1= -4 in boilgquz Spnilis g sdt moil alues e msb 2290x9 1o nuoms ordt at sdW

f. Finally, label the area that shows the net change in welfare. Is this a net positive or a net negative? brognor o 4. Consider a profit-maximizing, perfectly-competitive firm in the short run. a. Carefully define what we mean by the short run. bis () dillup ano hdili b. Draw a diagram for this firm using the more realistic or complicated case (where the law of diminishing returns does not begin immediately) consisting of an average variable cost curve (AVC), an average total cost curve (ATC), and a marginal cost curve (MC). muindiliups c. In this diagram, draw in a price (P) or marginal revenue (MR) line for which the firm is earning positive economic profits. Carefully label the profit rectangle. pisric d. In a new diagram, draw in a P/MR line for which the firm is earning negative s economic profits but positive profits on operation. Carefully label the profits on operation rectangle. 100 od bas e. For the diagram in 4d, please carefully explain why the firm might continue to produce despite the negative profits. wode bns 1= -4 in boilgquz Spnilis g sdt moil alues e msb 2290x9 1o nuoms ordt at sdW

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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