Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph todetermine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferentbetween producing and shutting down, it will choose to produce. (Hint: Select purple points (diamond symbols] on the graph to receive exact averagevariable cost information.)Price(Dollars per overalls)12.5027.5045.00Quantity(Overallses)Total Revenue(Dollars)Fixed Cost Variable Cost(Dollars)(Dollars)135,000135,000135,000Profit(Dollars)If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's foxxed cost is $135,000 per day. In other words, if itshuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease).This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is 5. Profit maximization and shutting down in the short runThe following graph plots daily cost curves for a firm operating in the competitive market for demin overalls.PRICE (Dollars per overalls)845403030% 8251510S10D2nMCATCAVC4GB 10 12 14QUANTITY (Thousands of overalises)161620

A competitive market is the market where consumer and producer has no power to influence the market…

Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points (diamond symbols] on the graph to receive exact average variable cost information.) Price (Dollars per overalls) 12.50 27.50 45.00 Quantity (Overallses) Total Revenue (Dollars) Fixed Cost (Dollars) 135,000 135,000 135,000. Variable Cost (Dollars) Profit (Dollars) If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $135,000 per day. In other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is

Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points (diamond symbols] on the graph to receive exact average variable cost information.) Price (Dollars per overalls) 12.50 27.50 45.00 Quantity (Overallses) Total Revenue (Dollars) Fixed Cost (Dollars) 135,000 135,000 135,000. Variable Cost (Dollars) Profit (Dollars) If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $135,000 per day. In other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 23RQ: What two lines on a cost curve diagram intersect at the shutdown point?

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