The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. 100 90 80 70 COSTS (Dollars) & 88 30 20 10 0 0 MC D 010 20 30 Price (Dollars per lamp) 15 20 25 55 70 85 40 ATC AVC 50 60 70 80 90 100 QUANTITY (Thousands of lamps) 0 0 Quantity (Lamps) For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. ? Produce or Shut Down? Profit or Loss?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds
to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting
with the point closest to the origin. You are given more points to plot than you need.)
PRICE (Dollars per lamp)
100
8 8
70
50
30
20
10
0
PRICE (Dollars per lamp)
90
Suppose there are 5 firms in this industry, each of which has the cost curves previously shown.
100 Demand
80
10
70
20 30
50 60 70
QUANTITY (Thousands of lamps)
On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that
corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to
right, starting with the point closest to the origin. You are given more points to plot than you need.) Next, place the black point (plus symbol) on the
graph to indicate the short-run equilibrium price and quantity in this market.
Show Transcribed Text
20
10
On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that
corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to
right, starting with the point closest to the origin. You are given more points to plot than you need.) Next, place the black point (plus symbol) on the
graph to indicate the short-run equilibrium price and quantity in this market.
Note: Dashed drop lines will automatically extend to both axes.
0
0
80
80
50
100
100
Firm's Short-Run Supply
-0-
150 200 250 300 350 400 450 500
QUANTITY (Thousands of lamps)
At the current short-run market price, firms will
(?
0
Industry's Short-Run Supply
Equilibrium
in the short run. In the long run,
?
Transcribed Image Text:On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) PRICE (Dollars per lamp) 100 8 8 70 50 30 20 10 0 PRICE (Dollars per lamp) 90 Suppose there are 5 firms in this industry, each of which has the cost curves previously shown. 100 Demand 80 10 70 20 30 50 60 70 QUANTITY (Thousands of lamps) On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) Next, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Show Transcribed Text 20 10 On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) Next, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market. Note: Dashed drop lines will automatically extend to both axes. 0 0 80 80 50 100 100 Firm's Short-Run Supply -0- 150 200 250 300 350 400 450 500 QUANTITY (Thousands of lamps) At the current short-run market price, firms will (? 0 Industry's Short-Run Supply Equilibrium in the short run. In the long run, ?
The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in
the competitive market for sun lamps.
COSTS (Dollars)
100
90
80
70
30
20
10
0
0
☐
MC
Price
(Dollars per lamp)
15
20
25
55
70
85
ATC
AVC
0 10 20 30 40 50 60 70
QUANTITY (Thousands of lamps)
☐
Quantity
(Lamps)
80
90 100
For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select
whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals
average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether
the firm will earn a profit, incur a loss, or break even at each price.
(?)
Produce or Shut Down?
Profit or Loss?
Transcribed Image Text:The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. COSTS (Dollars) 100 90 80 70 30 20 10 0 0 ☐ MC Price (Dollars per lamp) 15 20 25 55 70 85 ATC AVC 0 10 20 30 40 50 60 70 QUANTITY (Thousands of lamps) ☐ Quantity (Lamps) 80 90 100 For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. (?) Produce or Shut Down? Profit or Loss?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 7 images

Blurred answer
Knowledge Booster
Costs
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
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)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
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-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education