Question

4. Profit maximization in the cost-curve diagram 

Suppose that the market for polo shirts is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 

Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 

In the short run, at a market price of $15 per shirt, this firm will choose to produce _______  shirts per day. 

On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $15 and the firm chooses to produce the quantity you already selected. 

Note: In the following question, enter a positive number, even if it represents a loss. 

The area of this rectangle indicates that the firm's _______ would be _______  thousand per day in the short run.

Answer 1

Answer 2

Since P

At P=15 the firm produces 10 units of output.

Loss=(27.5-15)*10

Loss=$125

Answer-10,loss,$125

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