The current status of the given firm.

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Chapter 5, Problem 3MC

To determine

The current status of the given firm.

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At its current level of production a profit-maximizing firm in a competitive market receives $15 for each unit it produces, and faces an average cost of $10. At the market price of $15, the firm’s marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. A. Draw a diagram that depicts the typical firm in this market. B. What is the firm’s current profit? C. What changes are likely to occur in this market and why?

10. N-Calculating Profit/Loss for PC Firm *4* Charley Company is a competitive price-taker firm that is currently producing 100 units of output (q-100), At the current level of production, the firm has Marginal Revenue of (MR=) $12, Marginal Cost of (MC=) $15, Average Variable Cost of (AVC=) $7, and Average Total Cost of (ATC=) $20. From this information, we can conclude that Charley Company is currently: O Suffering an economic loss but could decrease Its losses by decreasing production (q). O Enjoying an economic profit but could increase Its profits by Increasing production (q). O Enjoying an economic profit but could increase its profits by decreasing production (q). O Suffering an economic loss but should not change its production (a) as it is doing the best it can. O Suffering an economic loss but could decrease its losses by increasing production (a).

A profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of production is $100, i.e. TFC = $100. Which of the following statements is true? a If the firm produced, the firm's revenues would have been lower than $100. bIf the firm produced, the firm's total variable cost must be lower than $100. cIf the firm produced, the firm's losses would have been higher than $100. dIf the firm produced, the firm's total variable cost would have been higher than $100.