Consider the perfectly competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry.
For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price.
On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.)
On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is pesitive output. (Note: You are given more points to plot than you need.) Then, place the black point (plus symbol) on the graph to indicate the short-run equilibrium price and quantity in this market.
Note: Dashed drop lines will automatically extend to both axes.
Price | Quantity | P/S | P/L |
10 | 0 | S | L |
20 | Either 0 or 30000 | Either P or S | L |
32 | 35000 | P | L |
40 | 37500 | P | L |
50 | 40000 | P | Breakeven |
60 | 42500 | P | P |
Price | Quantity | Q-9 Firms |
10 | 0 | 0 |
20 | 30000 | 270000 |
32 | 35000 | 315000 |
40 | 37500 | 337500 |
50 | 40000 | 360000 |
60 | 42500 | 382500 |
Blanks-
1) produce
2) firms will neither enter nor exit
for the second blank the answer is actually some firms will exit.
> no its right
Aaron Nguyen Wed, Apr 20, 2022 4:12 PM
Consider the perfectly competitive market for sports jackets. The following graph shows the marginal cost (MC),...
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> thats wrong
mirandaasdasdasda Thu, Nov 11, 2021 3:49 PM