(i) Complete the Table above by filling in the blank cells.  (ii) Based on the above Table, Pacesetter’s profit maximizing or loss minimizing level of output is __________; and the (profit is _________) or (loss is __________)  (iii) Should the firm continue to produce in the short run? What will happen in the long-run?

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Chapter1: Making Economics Decisions
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PART C: MARKET ANALYSIS

  • Pacesetter is a manufacturer of three-ring binders operating in a perfectly competitive industry. The Table below shows the firm's cost and revenue schedule

Quantity (cases)

Variable Cost

Total Cost

 Marginal Cost

Average Variable Cost

Average Total Cost

Total Revenue

Profit  (or Loss)

0

   $0

$76

 

 

 

 

 

1

  30

106

 

 

 

$40

 

2

  50

 

 

 

 

 

 

3

 

134

 

 

 

 

 

4

 

140

 

 

 

 

 

5

 

160

 

 

 

 

 

6

114

 

 

 

 

 

 

7

150

 

 

 

 

 

 

8

190

 

 

 

 

 

 

9

 

316

 

 

 

 

 

 

PART C: MARKET ANALYSIS
 
 
(i)
Complete the Table above by filling in the blank cells. 
(ii)
Based on the above Table, Pacesetter’s profit maximizing or loss minimizing level of output is __________;
and the (profit is _________) or (loss is __________) 
(iii)
Should the firm continue to produce in the short run? What will happen in the long-run?

iv)What price corresponds to the shut-down point for Pacesetter and what will be the associated output? Explain briefly how you obtained your answer? 

 

v)If the firm's fixed costs were $30 higher what would be the profit-maximizing output level in the short run? Should the firm continue to operate? Why? 

 

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