Suppose at the level of output q = 100, the average variable cost is $7/unit, the marginal cost is $8/unit, the average total cost is $9/unit, and the price is $10/unit. Draw the cost (AVC, MC, AC) and marginal revenue curves for the firm and show where the firm is at q = 100. Use the diagram to answer the following questions: Is the firm making a positive profit or is it losing money (in the short run)? Explain with a reference to your diagram. Can the firm increase its profit (in the short run)? Explain with a reference to your diagram.
Suppose at the level of output q = 100, the average variable cost is $7/unit, the marginal cost is $8/unit, the average total cost is $9/unit, and the price is $10/unit. Draw the cost (AVC, MC, AC) and marginal revenue curves for the firm and show where the firm is at q = 100. Use the diagram to answer the following questions: Is the firm making a positive profit or is it losing money (in the short run)? Explain with a reference to your diagram. Can the firm increase its profit (in the short run)? Explain with a reference to your diagram.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Suppose at the level of output q = 100, the average variable cost is $7/unit, the marginal
cost is $8/unit, the average total cost is $9/unit, and the price is $10/unit. Draw the cost
(AVC, MC, AC) and marginal revenue curves for the firm and show where the firm is at q
= 100.Use the diagram to answer the following questions:
Is the firm making a positive profit or is it losing money (in the short run)? Explain
with a reference to your diagram.
• Can the firm increase its profit (in the short run)? Explain with a reference to your
diagram.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F53bdb1ff-fd5c-4bc2-8b7c-5169b6179f39%2F8d2ad700-a265-4938-b1c4-6e5e6c7ec4c1%2Fjmaimz_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Suppose at the level of output q = 100, the average variable cost is $7/unit, the marginal
cost is $8/unit, the average total cost is $9/unit, and the price is $10/unit. Draw the cost
(AVC, MC, AC) and marginal revenue curves for the firm and show where the firm is at q
= 100.Use the diagram to answer the following questions:
Is the firm making a positive profit or is it losing money (in the short run)? Explain
with a reference to your diagram.
• Can the firm increase its profit (in the short run)? Explain with a reference to your
diagram.
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