Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 13, Problem 5IP

(a)

To determine

Relationship between ATC, AVC, and price when the firm decides to close.

(b)

To determine

The long-run impact of constant cost industry in a perfectly competitive market.

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A. If a firm operating in a perfectly competitive market doubles the amount it sells, what happens to the price of its output and its total revenue? B. How does a competitive firm determine its profit-maximizing level of output?  When does a competitive firm decide to temporarily shut down in the short run?  Explain, using the concepts of marginal cost, marginal revenue, price, and average variable cost.
Price Average total cost AVC Demand Marginal cost Marginal revenue Q Quantity Discuss the firm plotted on the figure. What type of firm do you see?is the firm operating at the optimal point of production? is the firm making a proht? s the firm operating in the short or in the long run?
Slide 2 Questions: a. What is the total revenue of the firm at the optimum level of output? b. What is the total cost at the optimum level of output? c. What is the profit of the firm at the optimum (profit-maximizing) level of output? d. What is the average cost of each unit sold at the optimum level of output? Is the firm at its log-run equilibrium? If yes/no, why?
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