Figure: Profit Maximization in a Competitive Market Price $10 9 MC AC 8 7- 6 5 4 3 2 1- 0 2 4 6 8 10 12 14 16 18 20 Quantity At a price of $8 in this diagram, profit per unit is approximately _ and total profit is approximately (Please label where is the price, quantity, and profit). Your Answer: Profit per unit is approximately 0, we don't know the total cost from the diagram, therefore we cannot calculate the total revenue. Total profit = $16- total cost == profit/unit = 2.5 (Q* = 14, when P = MR = MC = $8; AC at this Q* is about $5.5); Total profit = 35 (= 2.5*14)

Figure: Profit Maximization in a Competitive Market Price $10 9 MC AC 8 7- 6 5 4 3 2 1- 0 2 4 6 8 10 12 14 16 18 20 Quantity At a price of $8 in this diagram, profit per unit is approximately _ and total profit is approximately (Please label where is the price, quantity, and profit). Your Answer: Profit per unit is approximately 0, we don't know the total cost from the diagram, therefore we cannot calculate the total revenue. Total profit = $16- total cost == profit/unit = 2.5 (Q* = 14, when P = MR = MC = $8; AC at this Q* is about $5.5); Total profit = 35 (= 2.5*14)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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