**Rambutan Economics: Understanding Profit Maximization**Rambutan is a fruit prized in Eastern Asia for its unique hairy appearance. Once peeled, it reveals a sweet, slightly sour grape-like gummy tasting fruit. Consider the graph for marginal revenue (MR), marginal cost (MC), and average total cost (ATC) for a perfectly competitive rambutan farmer.Move point A to label the profit-maximizing output and price for this farmer.**Graph Analysis:**- **Axes:** The x-axis represents the quantity of rambutan (bushels), ranging from 0 to 10. The y-axis represents the price in dollars per bushel, ranging from $0 to $20. - **Lines:** - **MR (Marginal Revenue):** This is a horizontal line indicating a constant price or revenue per unit sold. - **MC (Marginal Cost):** This is an upward sloping curve, initially decreasing and then increasing, reflecting the typical U-shape of marginal costs. - **ATC (Average Total Cost):** This curve is U-shaped, similar to the MC curve but typically wider and slightly higher at the start and end.- **Point A:** This point is marked at a price level of $19 per bushel and a quantity of around 3 bushels, indicating the intersection of MC and MR, where profit maximization occurs. At this point, the farmer’s output level is optimized for profit, as MC equals MR.Students should understand that in a perfectly competitive market, profit maximization is achieved where marginal cost equals marginal revenue. This firm is currently incurring a [dropdown: profit/loss]. In the long run, other firms will [dropdown: leave/enter] this market.If the market price falls to $8 per bushel, then:- ⭕ this firm is breaking even (zero profit).- ⭕ this firm is making an economic profit.- ⭕ this firm is at its shut down price.- ⭕ this firm is incurring a loss.

A perfectly competitive firm produces at the intersection point of the horizontal demand curve and…

Rambutan is a fruit prized in Eastern Asia for its unique hairy look. Once peeled, it reveals a sweet, slightly sour grape-like gummy tasting fruit. Consider the graph for marginal revenue (MR), marginal cost (MC), and average total cost (ATC) for a perfectly competitive rambutan farmer. Move point A to label the profit-maximizing output and price for this farmer. 20 19 19 18 17 MC 16 15 ATC 14 13 12 MR 11 9 8 7 6 4 3 1 2. 1 3 4 7 8 9 10 Price ($ per bushel)

Rambutan is a fruit prized in Eastern Asia for its unique hairy look. Once peeled, it reveals a sweet, slightly sour grape-like gummy tasting fruit. Consider the graph for marginal revenue (MR), marginal cost (MC), and average total cost (ATC) for a perfectly competitive rambutan farmer. Move point A to label the profit-maximizing output and price for this farmer. 20 19 19 18 17 MC 16 15 ATC 14 13 12 MR 11 9 8 7 6 4 3 1 2. 1 3 4 7 8 9 10 Price ($ per bushel)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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