Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 9, Problem 3.6P
(a)
To determine
The profit or loss earned by a representative firm when demand is D1.
(b)
To determine
The profit or loss earned by a representative firm when demand is D2.
(c)
To determine
The profit or loss earned by a representative firm when demand is D3.
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The graph below summarizes the demand and costs for a firm that operates in a perfectly competitive market.
Instructions: Use the nearest whole numbers on the graph when calculating numerical responses below.
" A graph summarizes the demand and costs for a firm that operates in a perfectly competitive market.""The horizontal axis labeled quantity ranges from 0 to 11 in increments of 1. The vertical axis labeled dollar ranges from 0 to 48 in increments of 4. A horizontal line labeled D-superscript f = M R enters the quadrant through the point (0, 28). An upward-facing curve labeled M C begins at the point (0.5, 20) goes down to the right with decreasing steepness to a low point at (3.5, 8) then goes up to the right with increasing steepness to end at the point (8, 40). A second upward-facing curve labeled A V C begins at the point (0.5, 22) goes down to the right with decreasing steepness to a low point at (5, 12) then goes up to the right with increasing steepness to end at the…
The following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. a. What level of output should this firm produce in the short run? b. What price should this firm charge in the short run? c. What is the firm’s total cost at this level of output? d. What is the firm’s total variable cost at this level of output? e. What is the firm’s fixed cost at this level of output? f. What is the firm’s profit if it produces this level of output? g. What is the firm’s profit if it shuts down? h. In the long run, should this firm continue to operate or shut DOWN
Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm's total revenue and total costs.
Chapter 9 Solutions
Principles of Economics (12th Edition)
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