Your business, which has some market power, has the following demand (D), marginal revenue (MR), marginal cost (MC), and average cost (AC) curves. Move point E to label the profit-maximizing price and quantity for your firm. If the goal of your business is to maximize profit, how much will it produce, and what price will it charge? -The business will exit the market because it is unable to cover its average costs. -The business will produce 40 units, and charge a price of $5. -The business will produce 30 units, and charge a price of $3. -The business will produce 30 units, and charge a price of $6.
Your business, which has some market power, has the following demand (D), marginal revenue (MR), marginal cost (MC), and average cost (AC) curves. Move point E to label the profit-maximizing price and quantity for your firm. If the goal of your business is to maximize profit, how much will it produce, and what price will it charge? -The business will exit the market because it is unable to cover its average costs. -The business will produce 40 units, and charge a price of $5. -The business will produce 30 units, and charge a price of $3. -The business will produce 30 units, and charge a price of $6.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Your business, which has some market power, has the following demand (D), marginal revenue (MR), marginal cost (MC), and average cost (AC)
If the goal of your business is to maximize profit, how much will it produce, and what price will it charge?
-The business will exit the market because it is unable to cover its average costs.
-The business will produce 40 units, and charge a price of $5.
-The business will produce 30 units, and charge a price of $3.
-The business will produce 30 units, and charge a price of $6.
Transcribed Image Text:Price ($)
10
9
8
7
6
5
4
3
2
1
0
0
10
20
30
MR
40
Quantity
50 60
MC
70 80
ATC
E
D
90 100
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