Answered: The slope of TR and TC are each…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The slope of TR and TC are each constant at 10 dollars and 5 dollars respectively and the total fixed cost is 1500 dollars, the breakeven is___________________? The market is [perfect or imperfect]?

Expert Solution

Step 1

The Break-even point is that point where firms necessarily need to make a normal profit.

According to Question TR and TC are Constant.

The slop of TR is MR and TC is MC

$T R = M R \times Q = 10 Q T C = F C + M C \times Q = 1500 + 5 Q P r o f i t = T R - T C = 10 Q - 1500 + 5 Q = 5 Q - 1500 T h i s i s b r e a k e v e n p o i n t Q = \frac{1500}{5} = 300$

"Q" is denoted here Quantity

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