Please only Typing answerI need ASAP ### Demand and Cost Curves: An AnalysisThe graph above presents the demand and cost curves for Tom's Jeans, a monopolistically competitive firm. The following curves are depicted:- **MC (Marginal Cost)**: This curve shows the additional cost of producing one more pair of jeans.- **ATC (Average Total Cost)**: This curve represents the average cost per unit of output, including both fixed and variable costs.- **D (Demand)**: The demand curve illustrates the relationship between the price of jeans and the quantity demanded.- **MR (Marginal Revenue)**: This curve shows the additional revenue gained from selling one more pair of jeans.On the vertical axis, the graph measures the price in dollars. On the horizontal axis, the graph represents the number of pairs of jeans produced and sold.### Fixed Costs and Profit CalculationTom's Jeans has fixed costs amounting to $300, which are considered sunk costs. To determine the firm's profit in the short run, we must identify the profit-maximizing output and price. This occurs where the Marginal Cost (MC) curve intersects the Marginal Revenue (MR) curve.1. **Find the Intersection Point**: The MC and MR curves intersect around the output level of 72 pairs of jeans.2. **Determine the Price**: From the Demand (D) curve directly above this output level, the price is approximately $22.3. **Calculate Total Revenue (TR)**: Total Revenue is found by multiplying the price by the quantity produced (72 pairs * $22 = $1,584).4. **Calculate Total Cost (TC)**: Total Cost includes fixed costs and variable costs. - From the ATC curve at the 72-pair output level, the ATC is approximately $27. - Total Cost is ATC multiplied by the quantity produced (72 pairs * $27 = $1,944).5. **Calculate Profit**: Profit is Total Revenue minus Total Cost ($1,584 - $1,944 = -$360).### SummarySince the profit is negative, Tom's Jeans incurs a loss of $360 when producing the profit-maximizing level of output in the short run.#### Multiple-Choice QuestionIf the firm produces the profit-maximizing level of output and sells it at the profit-maximizing price in the short run, the firm's profit is:- -$720- -$360- -

The Monopolistically competitive firm produces where the MR=MC. the monopolistically competitive…

Tom's Jeans has fixed costs of $300 and all his fixed costs are unk. f the firm produces the profit-maximizing level of output and ells it at the profit maximizing price in the short run, the rm's profit is

Tom's Jeans has fixed costs of $300 and all his fixed costs are unk. f the firm produces the profit-maximizing level of output and ells it at the profit maximizing price in the short run, the rm's profit is

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

Please only Typing answer

I need ASAP

### Demand and Cost Curves: An Analysis

The graph above presents the demand and cost curves for Tom's Jeans, a monopolistically competitive firm. The following curves are depicted:

- **MC (Marginal Cost)**: This curve shows the additional cost of producing one more pair of jeans.
- **ATC (Average Total Cost)**: This curve represents the average cost per unit of output, including both fixed and variable costs.
- **D (Demand)**: The demand curve illustrates the relationship between the price of jeans and the quantity demanded.
- **MR (Marginal Revenue)**: This curve shows the additional revenue gained from selling one more pair of jeans.

On the vertical axis, the graph measures the price in dollars. On the horizontal axis, the graph represents the number of pairs of jeans produced and sold.

### Fixed Costs and Profit Calculation

Tom's Jeans has fixed costs amounting to $300, which are considered sunk costs.

To determine the firm's profit in the short run, we must identify the profit-maximizing output and price. This occurs where the Marginal Cost (MC) curve intersects the Marginal Revenue (MR) curve.

1. **Find the Intersection Point**: The MC and MR curves intersect around the output level of 72 pairs of jeans.
2. **Determine the Price**: From the Demand (D) curve directly above this output level, the price is approximately $22.
3. **Calculate Total Revenue (TR)**: Total Revenue is found by multiplying the price by the quantity produced (72 pairs * $22 = $1,584).
4. **Calculate Total Cost (TC)**: Total Cost includes fixed costs and variable costs.
- From the ATC curve at the 72-pair output level, the ATC is approximately $27.
- Total Cost is ATC multiplied by the quantity produced (72 pairs * $27 = $1,944).
5. **Calculate Profit**: Profit is Total Revenue minus Total Cost ($1,584 - $1,944 = -$360).

### Summary

Since the profit is negative, Tom's Jeans incurs a loss of $360 when producing the profit-maximizing level of output in the short run.

#### Multiple-Choice Question
If the firm produces the profit-maximizing level of output and sells it at the profit-maximizing price in the short run, the firm's profit is:
- -$720
- -$360
- -

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