### Profit Maximization Analysis#### Graph Explanation:The graph depicted represents the quantities and corresponding marginal revenues (MR) for a firm. The key points indicated are at quantities of 30, 45, and 50 units, with the MR curve for the firm shown intersecting at these points. The demand curve (D) is also indicated.#### Analysis Details:- **Profit Maximizing Quantity:** The firm will maximize its profit at a quantity of **______** units.- **Price Per Unit:** After choosing the profit-maximizing quantity, the firm will charge a price of **______** per unit for this output.- **Revenue:** The firm will receive $ **______** in revenue at the profit-maximizing quantity.- **Total Cost of Production:** The total cost of production for this profit-maximizing quantity is $ **______**.- **Maximum Profit:** The maximum profit the firm can earn in this situation is $ **______**.#### Future Outlook:How will the situation change over time?- Losses will induce firms to leave this market until the profit-maximizing price falls to zero.- Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost.- This market is already in long-run equilibrium, and will not change throughout time.- The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity. **Short-Run Demand and Cost Situation for a Price Searcher**The accompanying graph illustrates the short-run demand and cost situation for a price searcher in a market with low barriers to entry.### Graph ExplanationThe graph contains the following elements:- **D (Demand curve)**: The blue curve, negatively sloped from left to right, indicating that as the price decreases, the quantity demanded increases.- **MR (Marginal Revenue curve)**: The green curve, also negatively sloped but steeper than the demand curve. It shows the additional revenue generated by selling one more unit of the good.- **MC (Marginal Cost curve)**: The orange curve, U-shaped, indicating the cost of producing one more unit of the good.- **ATC (Average Total Cost curve)**: The yellow curve, U-shaped, indicating the average cost of production at each quantity level.### Key Points- The price at the profit-maximizing quantity level is where the MR and MC curves intersect. In the graph, this quantity is 45 units.- At this quantity (45 units), the price is $24 and the average total cost (ATC) is $10.- The firm maximizes its profit at this quantity level.**Blank to Fill in:**- The firm will maximize its profit at a quantity of ___45___ units.This graph is essential for understanding how firms determine the price and quantity to maximize profits in a competitive market with low entry barriers.

In this economic scenario we explore the concept of profit maximization and the dynamics of market…

The firm will maximize its profit at a quantity of After choosing the profit maximizing quantity, the firm will charge a price of The firm will receive $ units. in revenue at the profit-maximizing quantity. The total cost of production for this profit-maximizing quantity is $ The maximum profit the firm can earn in this situation is $ How will the situation change over time? per unit for this output. Losses will induce firms to leave this market until the profit maximizing price falls to zero. Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost. This market is already in long-run equilibrium, and will not change throughout time. The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity.

The firm will maximize its profit at a quantity of After choosing the profit maximizing quantity, the firm will charge a price of The firm will receive $ units. in revenue at the profit-maximizing quantity. The total cost of production for this profit-maximizing quantity is $ The maximum profit the firm can earn in this situation is $ How will the situation change over time? per unit for this output. Losses will induce firms to leave this market until the profit maximizing price falls to zero. Profits will attract rival firms into the market until the profit-maximizing price falls to the level of per-unit cost. This market is already in long-run equilibrium, and will not change throughout time. The market will adjust until the price charged by this firm no longer exceeds marginal cost at the profit-maximizing quantity.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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