Using the figure above, what is the optimal quantity of goods for the firm to produce? Below is the transcription and detailed explanation of the graph displayed in the image.---### Cost Curves in Microeconomics**Graph Explanation:**The graph depicted here illustrates several important economic cost curves for a firm. These curves are essential for understanding the firm's cost structure and economic decisions:1. **Y-Axis (Dollars per Unit):** - The vertical axis represents the cost in dollars per unit of the good produced. - The scale begins at $0 and increments by $8, ranging up to $120.2. **X-Axis (Quantity Produced):** - The horizontal axis represents the quantity of goods produced. - The scale begins at 0 and increments by 100, ranging up to approximately 500 units.3. **Curves:** - **MC (Marginal Cost):** - Depicted as the upward-sloping curve that intersects with both ATC and AVC. - It starts from a lower point, increasing steeply as the quantity increases. - **MR (Marginal Revenue):** - Depicted as a horizontal line extending across the graph. - **ATC (Average Total Cost):** - Starts at a higher point compared to AVC and MC, generally 'U' shaped, intersecting the MC curve at its lowest point. - **AVC (Average Variable Cost):** - Also 'U' shaped but starts at a lower point than ATC, intersecting the MC curve as well.**Key Points:**- The Marginal Cost (MC) curve always intersects both the Average Total Cost (ATC) and the Average Variable Cost (AVC) curves at their respective minimum points.- The output level at which the MC intersects the ATC curve’s lowest point is where the average costs are minimized.**Question for Consideration:**- Based on the figure above, what is the optimal quantity of goods for the firm to produce?The optimal quantity of production can be determined at the point where the Marginal Cost (MC) curve intersects the Marginal Revenue (MR) curve, which is not explicitly marked but should usually align with the profit-maximizing output levels on the graph.---This graph is crucial for understanding how firms make production decisions to minimize costs and maximize profitability within microeconomic principles.

The condition for optimal output for a firm is when: MR=MC Thus, in the given figure, when the MR…

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Using the figure above, what is the optimal quantity of goods for the firm to produce?

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

Using the figure above, what is the optimal quantity of goods for the firm to produce?

Below is the transcription and detailed explanation of the graph displayed in the image.

---

### Cost Curves in Microeconomics

**Graph Explanation:**

The graph depicted here illustrates several important economic cost curves for a firm. These curves are essential for understanding the firm's cost structure and economic decisions:

1. **Y-Axis (Dollars per Unit):**
- The vertical axis represents the cost in dollars per unit of the good produced.
- The scale begins at $0 and increments by $8, ranging up to $120.

2. **X-Axis (Quantity Produced):**
- The horizontal axis represents the quantity of goods produced.
- The scale begins at 0 and increments by 100, ranging up to approximately 500 units.

3. **Curves:**
- **MC (Marginal Cost):**
- Depicted as the upward-sloping curve that intersects with both ATC and AVC.
- It starts from a lower point, increasing steeply as the quantity increases.
- **MR (Marginal Revenue):**
- Depicted as a horizontal line extending across the graph.
- **ATC (Average Total Cost):**
- Starts at a higher point compared to AVC and MC, generally 'U' shaped, intersecting the MC curve at its lowest point.
- **AVC (Average Variable Cost):**
- Also 'U' shaped but starts at a lower point than ATC, intersecting the MC curve as well.

**Key Points:**
- The Marginal Cost (MC) curve always intersects both the Average Total Cost (ATC) and the Average Variable Cost (AVC) curves at their respective minimum points.
- The output level at which the MC intersects the ATC curve’s lowest point is where the average costs are minimized.

**Question for Consideration:**
- Based on the figure above, what is the optimal quantity of goods for the firm to produce?

The optimal quantity of production can be determined at the point where the Marginal Cost (MC) curve intersects the Marginal Revenue (MR) curve, which is not explicitly marked but should usually align with the profit-maximizing output levels on the graph.

---

This graph is crucial for understanding how firms make production decisions to minimize costs and maximize profitability within microeconomic principles.

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