The table above shows the total cost function for a typical firm producing hats in a perfectly competitive market. The market price for hats is $9 per hat. (a) Calculate the average variable cost of the fifth unit. Show your work. (b) What is the firm’s profit-maximizing quantity of hats? Explain using marginal analysis. (c) If the rent of the building the firm occupies increases, what will happen to the firm’s profit-maximizing quantity of hats in the short run? Explain. (d) Draw a correctly labeled graph showing the firm’s demand and marginal cost curves, and show the profit-maximizing quantity of hats, labeled Q*.
The table above shows the total cost function for a typical firm producing hats in a
(a) Calculate the
(b) What is the firm’s profit-maximizing quantity of hats? Explain using marginal analysis.
(c) If the rent of the building the firm occupies increases, what will happen to the firm’s profit-maximizing quantity of hats in the short run? Explain.
(d) Draw a correctly labeled graph showing the firm’s demand and marginal cost
![Quantity of Output
0
1
2
3
4
5
6
7
Total Cost
$12
$14
$18
$24
$32
$42
$54
$68](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb2588ae5-8f6d-4073-aa6e-e1d67aa2049b%2F6c7d1357-96c2-4a1f-a21d-a78d02775982%2Fitx89ss_processed.jpeg&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 1 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Draw a correctly labeled graph showing the firm’s demand and marginal cost
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Survey Of Economics](https://www.bartleby.com/isbn_cover_images/9781337111522/9781337111522_smallCoverImage.gif)
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Survey Of Economics](https://www.bartleby.com/isbn_cover_images/9781337111522/9781337111522_smallCoverImage.gif)
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
![Managerial Economics: Applications, Strategies an…](https://www.bartleby.com/isbn_cover_images/9781305506381/9781305506381_smallCoverImage.gif)