What is the profit maximizing quantity of output? What price should the firm charge for its output? For that price and quantity does the firm make economic profit, economic loss or breaks even? How do you know? Explain your answer.

What is the profit maximizing quantity of output? What price should the firm charge for its output? For that price and quantity does the firm make economic profit, economic loss or breaks even? How do you know? Explain your answer.

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

What is the profit maximizing quantity of output?
What price should the firm charge for its output?
For that price and quantity does the firm make economic profit, economic loss or breaks even? How do you know? Explain your answer.

Price/
Costs
120
110
100
60
MR
35 45 50
MC
D
90
ATC₁
ATC₂
Quantity (hundreds per week)

Definition Definition Amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item

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