Question #2: Using the following graph to answer the following questions: 100 MC 80 ATC 60 AVC 40 20 MR 1,000 2,000 3,000 4,000 5,000 Notes: MC is marginal cost, MR is marginal revenue, ATC is average total cost, AVC is average variable cost and D is the demand curve. a. By looking of this graph, what can you say about the market power of this firm? Is it a perfect competition or a monopoly? Explain. b. To maximize the profit, how many units should the firm produce? At what price? c. Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost? d. Will you operate this firm in the short run? Long run? Briefly explain. Revenues and costs (dollars)
Question #2: Using the following graph to answer the following questions: 100 MC 80 ATC 60 AVC 40 20 MR 1,000 2,000 3,000 4,000 5,000 Notes: MC is marginal cost, MR is marginal revenue, ATC is average total cost, AVC is average variable cost and D is the demand curve. a. By looking of this graph, what can you say about the market power of this firm? Is it a perfect competition or a monopoly? Explain. b. To maximize the profit, how many units should the firm produce? At what price? c. Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost? d. Will you operate this firm in the short run? Long run? Briefly explain. Revenues and costs (dollars)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Please have a look at graph in the photo to answer the following questions
Notes: MC is marginal cost, MR is marginal revenue, ATC is
a. By looking of this graph, what can you say about the market power of this firm? Is it a
c. Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost?
d. Will you operate this firm in the short run? Long run? Briefly explain.
**Graph Explanation:**
The graph depicts several key economic curves:
- **MC (Marginal Cost):** An upward-sloping curve illustrating the cost of producing one more unit.
- **MR (Marginal Revenue):** A downward-sloping line representing the additional revenue from selling one more unit.
- **ATC (Average Total Cost):** A U-shaped curve showing the cost per unit, including both fixed and variable costs.
- **AVC (Average Variable Cost):** A U-shaped curve below the ATC, indicating the cost per unit excluding fixed costs.
- **D (Demand Curve):** A downward-sloping line representing the quantity demanded at each price level.
**Notes:** MC is marginal cost, MR is marginal revenue, ATC is average total cost, AVC is average variable cost, and D is the demand curve.
**Questions:**
a. By looking at this graph, what can you say about the market power of this firm? Is it a perfect competition or a monopoly? Explain.
b. To maximize the profit, how many units should the firm produce? At what price?
c. Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed costs?
d. Will you operate this firm in the short run? Long run? Briefly explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a00f187-2328-43f0-a426-d929a7e8a565%2Fce4975fe-2838-4c0b-9db4-1385c868c2ec%2Fjymc3jd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Question #2:** Using the following graph to answer the following questions:
**Graph Explanation:**
The graph depicts several key economic curves:
- **MC (Marginal Cost):** An upward-sloping curve illustrating the cost of producing one more unit.
- **MR (Marginal Revenue):** A downward-sloping line representing the additional revenue from selling one more unit.
- **ATC (Average Total Cost):** A U-shaped curve showing the cost per unit, including both fixed and variable costs.
- **AVC (Average Variable Cost):** A U-shaped curve below the ATC, indicating the cost per unit excluding fixed costs.
- **D (Demand Curve):** A downward-sloping line representing the quantity demanded at each price level.
**Notes:** MC is marginal cost, MR is marginal revenue, ATC is average total cost, AVC is average variable cost, and D is the demand curve.
**Questions:**
a. By looking at this graph, what can you say about the market power of this firm? Is it a perfect competition or a monopoly? Explain.
b. To maximize the profit, how many units should the firm produce? At what price?
c. Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed costs?
d. Will you operate this firm in the short run? Long run? Briefly explain.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education