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In the short run, at a market price of $45 per watch, this firm will choose to produce watches per day. 10,000 On the preceding graph, use the blue rectangle (circle symbols) to shade the area rep the firm's profit or loss if the market price is $45 and 30,000 the firm chooses to produce the quantity you already selected. 40,000 Note: In the following question, enter a positive number, even if it represents a loss. 45,000 The area of this rectangle indicates that the firm's would be $ thousand per day in the short run.

In the short run, at a market price of $45 per watch, this firm will choose to produce watches per day. 10,000 On the preceding graph, use the blue rectangle (circle symbols) to shade the area rep the firm's profit or loss if the market price is $45 and 30,000 the firm chooses to produce the quantity you already selected. 40,000 Note: In the following question, enter a positive number, even if it represents a loss. 45,000 The area of this rectangle indicates that the firm's would be $ thousand per day in the short run.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Short-Run Production Decision and Profit/Loss Calculation** In the short run, at a market price of $45 per watch, this firm will choose to produce _________ watches per day. **Instruction:** On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm’s profit or loss if the market price is $45 and the firm chooses to produce the quantity you already selected. **Graph Explanation:** The graph is a vertical blue rectangle divided into four segments labeled with the following quantities respectively: - 10,000 - 30,000 - 40,000 - 45,000 **Note:** In the following question, enter a positive number, even if it represents a loss. The area of this rectangle indicates that the firm’s _________ would be $_________ thousand per day in the short run. **Instructions for Students:** 1. Select the quantity of watches the firm will produce per day given the market price of $45 per watch. 2. Use the blue rectangle on the graph to represent the firm's profit or loss based on the selected quantity. 3. Enter the value in the specified fields to determine the firm’s financial outcome in thousand dollars per day.
Transcribed Image Text:**Short-Run Production Decision and Profit/Loss Calculation** In the short run, at a market price of $45 per watch, this firm will choose to produce _________ watches per day. **Instruction:** On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm’s profit or loss if the market price is $45 and the firm chooses to produce the quantity you already selected. **Graph Explanation:** The graph is a vertical blue rectangle divided into four segments labeled with the following quantities respectively: - 10,000 - 30,000 - 40,000 - 45,000 **Note:** In the following question, enter a positive number, even if it represents a loss. The area of this rectangle indicates that the firm’s _________ would be $_________ thousand per day in the short run. **Instructions for Students:** 1. Select the quantity of watches the firm will produce per day given the market price of $45 per watch. 2. Use the blue rectangle on the graph to represent the firm's profit or loss based on the selected quantity. 3. Enter the value in the specified fields to determine the firm’s financial outcome in thousand dollars per day.
### 4. Profit Maximization in the Cost-Curve Diagram Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. **Hint:** After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. #### Graph Explanation The graph depicts three curves that represent the firm's daily cost structures: 1. **MC (Marginal Cost):** The orange curve. 2. **ATC (Average Total Cost):** The green curve. 3. **AVC (Average Variable Cost):** The purple curve. - **X-axis (Quantity):** Represents the quantity of watches produced per day in thousands. - **Y-axis (Price):** Represents the price in dollars per watch. The intersection points of the curves are crucial in determining the profit-maximizing quantity of output and the corresponding price levels. For instance, where the MC curve intersects the ATC curve shows the point where average costs are minimized. **Note:** There is an interactive element indicated by the “Profit or Loss” tool, which lets the user place a rectangle on the graph and select endpoints to see their coordinates, helping to analyze different scenarios of profit or loss. By understanding these curves, students can gain insights into cost behaviors and decision-making processes for maximizing profit in a competitive market.
Transcribed Image Text:### 4. Profit Maximization in the Cost-Curve Diagram Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. **Hint:** After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. #### Graph Explanation The graph depicts three curves that represent the firm's daily cost structures: 1. **MC (Marginal Cost):** The orange curve. 2. **ATC (Average Total Cost):** The green curve. 3. **AVC (Average Variable Cost):** The purple curve. - **X-axis (Quantity):** Represents the quantity of watches produced per day in thousands. - **Y-axis (Price):** Represents the price in dollars per watch. The intersection points of the curves are crucial in determining the profit-maximizing quantity of output and the corresponding price levels. For instance, where the MC curve intersects the ATC curve shows the point where average costs are minimized. **Note:** There is an interactive element indicated by the “Profit or Loss” tool, which lets the user place a rectangle on the graph and select endpoints to see their coordinates, helping to analyze different scenarios of profit or loss. By understanding these curves, students can gain insights into cost behaviors and decision-making processes for maximizing profit in a competitive market.
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