The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry. Cost and revenues (in dollars) 20 18 MC 16 14 12 10 8 64 2 0 60 120 D (360, 18) AC MR 180 240 300 360 420 Quantity per period a) At the optimal output, what price will Do Drop In charge and what will be its output? Price: $ Output: units b) At the optimal price and output, what will be its total revenue, total cost, and total loss? TR: $ Total loss: $ ; TC: $ c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level? AVC must be less than $

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Please correct answer and don't use hand rating
The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry.
Cost and revenues (in dollars)
20
18
MC
16
14
12
10
8
64 2
0
60
120
D
(360, 18)
AC
MR
180 240 300 360 420
Quantity per period
Transcribed Image Text:The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry. Cost and revenues (in dollars) 20 18 MC 16 14 12 10 8 64 2 0 60 120 D (360, 18) AC MR 180 240 300 360 420 Quantity per period
a) At the optimal output, what price will Do Drop In charge and what will be its output?
Price: $
Output:
units
b) At the optimal price and output, what will be its total revenue, total cost, and total loss?
TR: $
Total loss: $
; TC: $
c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level?
AVC must be less than $
Transcribed Image Text:a) At the optimal output, what price will Do Drop In charge and what will be its output? Price: $ Output: units b) At the optimal price and output, what will be its total revenue, total cost, and total loss? TR: $ Total loss: $ ; TC: $ c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level? AVC must be less than $
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
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