Question

sh for a perfectly competitive firm to answer questions through 10. 'se the graph for a Price (P) 10.00 MC 8.75 8.00 7.75 7.50 ATC 6.25 AVC 5.50 5.25 250 300 440 500 Quantity If price = $10, the profit-maximizing/loss-minimizing level of output is 1) total revenue is equal to 2) $_ total cost is equal to 3) $_ and the firm earns economic profit equal to 4) $__ If price = $7.50, the profit-maximizing/loss-minimizing level of output is 5)_ total revenue is equal to 6) $ total cost is equal to 7) $_ and the firm earns economic profit equal to 8) $_ price = $5.50, the firm can either shut down immediately and pay fixed costs equal to 9) or the firm can produce at output level 300 and incur economic losses equal to 10) $

Answer 1

a) P=10

Output = 500

TR = P*Q = 10*500 = 5000

TC = ATC*Q = 7.75*500 = 3875

Profit = TR-TC = 5000-3875 = 1125

b) P= 7.5

Output = 440

TR=P*Q = 440*7.5 = 3300

TC=ATC*Q = 7.5*440 = 3300

Profit = TR-TC = 0

c) P=5.5

Fixed cost = 750

Loss = (5.5-8)*300 = --750