The following graph shows the average and marginal cost curves for Kandi Keynes, a perfectly competitive firm. ATC AVC 250 MC Tools 225 200 MR1 MR2 175 150 MR3 125 100 75 50 25 369 12 15 18 21 24 27 30 33 36 39 42 Output per period a. If the price is $150, draw in the marginal revenue curve, and label it MR1. Plot only the end points on the graph above. b. At this price, what are the break-even output(s), the profit-maximizing output, and the level of total profits at that output? Break-even output(s): and 30 profit-maximizing output: |for a total profit of $ Price/costs
The following graph shows the average and marginal cost curves for Kandi Keynes, a perfectly competitive firm. ATC AVC 250 MC Tools 225 200 MR1 MR2 175 150 MR3 125 100 75 50 25 369 12 15 18 21 24 27 30 33 36 39 42 Output per period a. If the price is $150, draw in the marginal revenue curve, and label it MR1. Plot only the end points on the graph above. b. At this price, what are the break-even output(s), the profit-maximizing output, and the level of total profits at that output? Break-even output(s): and 30 profit-maximizing output: |for a total profit of $ Price/costs
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please explain Part B
Transcribed Image Text:The following graph shows the average and marginal cost curves for Kandi Keynes, a perfectly competitive firm.
ATC
AVC
250
MC
Tools
225
200
MR1
MR2
175
150
MR3
125
100
75
50
25
369 12 15 18 21 24 27 30 33 36 39 42
Output per period
a. If the price is $150, draw in the marginal revenue curve, and label it MR1. Plot only the end points on the graph above.
b. At this price, what are the break-even output(s), the profit-maximizing output, and the level of total profits at that output?
Break-even output(s):
and
30
profit-maximizing output:
for a total profit of $
c. Draw a marginal revenue curve, labelled MR2, which ensures that, at best, the firm breaks even. Plot only the end points on the
graph above.
d. What is the corresponding break-even price?
Break-even price: $
e. Draw a marginal revenue curve, labelled MR3. which ensures that, at best, the firm just remains in operation. Plot only the end points
on the graph above.
f. What is the corresponding shutdown price?
Shutdown price: $
Price/costs
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