PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$.Write the equations of the firm’s costs, as a function of Q:Average Total Cost ATCAverage Variable Cost AVCAverage Fixed Cost AFCGiven above costs can you determine what will be the firm’s production in Stage 1?What is the breakeven price and breakeven quantity for this firm?What is the shutdown price and quantity for this firm?Draw the firm’s costs in a graph as per your determination in (a). Label the breakeven and shutdown price and quantity using information in (b) and (c) above.Given the market price of Pak$ 50how many units should the firm produce?how many firms are competing in this market in short-run?How many firms will be in the industry in the long-run?How do you interpret the profit or loss condition of PakPerfect? Use a two-panel graph of the Market and the Firm, to illustrate the impact if more firms enter the market in the long-run? (Maximum 150 words)

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Answered: PakPerfect Inc. estimates equation of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q² and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$.

Write the equations of the firm’s costs, as a function of Q:

Average Total Cost ATC
Average Variable Cost AVC
Average Fixed Cost AFC

Given above costs can you determine what will be the firm’s production in Stage 1?
What is the breakeven price and breakeven quantity for this firm?
What is the shutdown price and quantity for this firm?
Draw the firm’s costs in a graph as per your determination in (a). Label the breakeven and shutdown price and quantity using information in (b) and (c) above.
Given the market price of Pak$ 50

how many units should the firm produce?
how many firms are competing in this market in short-run?
How many firms will be in the industry in the long-run?

How do you interpret the profit or loss condition of PakPerfect? Use a two-panel graph of the Market and the Firm, to illustrate the impact if more firms enter the market in the long-run? (Maximum 150 words)

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