Figure 94 Monopolist (dollars) 10 8 0 Quantity MR MC D Refer to Figure 94. Suppose that the profit-maximizing/loss minimizing level of output is 40 units per day and the average fixed cost and average variable cost of producing this amount is $4 and $7, respectively. (a) What is the total cost of producing 40 units per day? Show your work. (b) What is the total profit earned/loss incurred by producing 40 units per day? Show your work. (c) What price will the firm charge to maximize profit or minimize loss? (d) Should the firm shut down or continue to produce in the short run? Explain.

Figure 94 Monopolist (dollars) 10 8 0 Quantity MR MC D Refer to Figure 94. Suppose that the profit-maximizing/loss minimizing level of output is 40 units per day and the average fixed cost and average variable cost of producing this amount is $4 and $7, respectively. (a) What is the total cost of producing 40 units per day? Show your work. (b) What is the total profit earned/loss incurred by producing 40 units per day? Show your work. (c) What price will the firm charge to maximize profit or minimize loss? (d) Should the firm shut down or continue to produce in the short run? Explain.

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

Figure 94 Monopolist
(dollars)
10
8
6
0
Quantity
MC
Refer to Figure 94. Suppose that the profit-maximizing/loss minimizing level of output is 40 units per day and the average fixed
cost and average variable cost of producing this amount is $4 $7, respectively.
(a) What is the total cost of producing 40 units per day? Show your work.
(b) What is the total profit earned/loss incurred by producing 40 units per day? Show your work.
(c) What price will the firm charge to maximize profit or minimize loss?
(d) Should the firm shut down or continue to produce in the short run? Explain.

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