Please note that this question has not yet been graded, I keep getting the error message that it has been graded and it hasn't been, thank you. ### Profit Maximization in the Cost-Curve Diagram**Scenario:**Suppose that the market for dress shirts 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 depicted in the assignment is a common diagram used in microeconomics to illustrate the cost structures of firms in a competitive market. The axes and curves on the graph represent the following:- **X-Axis:** Represents the quantity of dress shirts produced per day.- **Y-Axis:** Represents the price (in dollars) per dress shirt.**Curves on the Graph:**1. **Total Cost Curve (TC):** This curve typically shows the total cost of producing different quantities of output. However, the specific curve is not labeled in the provided snippet.2. **Average Total Cost (ATC) Curve:** This curve is labeled as "ATC" on the graph. It represents the average total cost per unit of output at different production levels. The ATC curve typically shows a U-shape due to the spreading of fixed costs over an increasing number of units and eventually rising variable costs.3. **Marginal Cost (MC) Curve:** This curve shows the change in total cost that arises from an extra unit of production. The shape of the MC curve usually intersects the ATC curve at its lowest point, indicating the optimal production quantity for minimizing average costs.4. **Profit or Loss Rectangle:** This feature allows users to place a rectangle on the graph, which can be useful to visualize the area representing profit or loss based on different cost and revenue combinations.To identify points on the graph, select the desired endpoints of the rectangle to see their coordinates. This will help in analyzing the cost structure and determining the profit-maximizing output levels.For further analysis, refer to additional study tools and economic principles provided in your course materials.#### Recommended Tools:On the left side, the website provides additional resources such as:- **Catalog and Study Tools**- **Rental Options**- **College Success Tips**### Need Help?For assistance, utilize the 'Help' option or provide feedback through the available channels.---This educational content aims to assist students in understanding the concepts of cost curves and profit maximization in a competitive market using visual aids and step-by-step instructions. ### CENGAGE | MINDTAP#### Homework (Ch 09)In the short run, at a market price of $15 per shirt, this firm will choose to produce ______ shirts per day.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 $15 and the firm chooses to produce the quantity you already selected.**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.---### Graph Description**Axes:**- **Horizontal Axis (X-Axis):** Represents the QUANTITY (in thousands of shirts per day).- **Vertical Axis (Y-Axis):** Represents the PRICE (in dollars).**Curves:**- **MC (Marginal Cost):** The orange curve represents the marginal cost which shows the cost of producing one more unit of a good.- **AVC (Average Variable Cost):** The purple curve represents the average variable cost, indicating the variable cost per unit of output.**Intersection Points:**- To find the firm's optimal output level, locate the point where the market price of $15 intersects the MC curve. This point will determine the quantity of shirts the firm will produce in the short run.**Shading Area for Profit or Loss:**- After determining the optimal quantity, use the corresponding area on the graph to shade the profit or loss rectangle. The height of this rectangle will be the difference between the market price ($15) and the AVC at the optimal quantity. The width will correspond to the optimal quantity of shirts.Grade your results by shading and calculating the profit or loss as directed using the graph above. Enter the values in the blanks to understand the financial outcome for the firm in this scenario.

The equilibrium condition for the competitive firm is MR=MC. In the above diagram, we can see that…

PRICE (Dollar: 15 10 5 0 AVC MC 0 2 4 6 8 10 12 14 16 18 20 QUANTITY (Thousands of shirts per day) In the short run, at a market price of $15 per shirt, this firm will choose to produce shirts per day. 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 $15 and the firm chooses to produce the quantity you already selected. 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.

PRICE (Dollar: 15 10 5 0 AVC MC 0 2 4 6 8 10 12 14 16 18 20 QUANTITY (Thousands of shirts per day) In the short run, at a market price of $15 per shirt, this firm will choose to produce shirts per day. 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 $15 and the firm chooses to produce the quantity you already selected. 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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