Question

| 20 | Sam runs a small steam-cleaning business. Assume the market for steam cleaning is perfectly competitive. Suppose Sam's cost structure is given by the following table. Average Average Total Quantity Variable Cost Total Cost Marginal Cost Variable Cost Cost $0 $50 -- 1 2 80 3 45 95 31.67 - 4 62 112 15.50 5 90 140 6 132 182 30.33 186 236 26.57 33.71 a. Fill in the table above. 30 | | | | | + 39. b. What is the fixed cost of production? units of output and its c. If the market price is $42, then for this firm to maximize profits it should produce profits will be d. If the market price is $17, then in the short run, what should the firm do to maximize profit or to minimize loss? Explain. e. If the market price is $17, then in the long run, what should the firm do to maximize profit or to minimize loss? Explain. f. What is the firm's shutdown price? g. In the long run, if cost conditions do not change, this firm will earn a zero economic profit at what price?

Answer 1

MC AUC so oly ve 0 0 5 I 20 70 2 30 80 3 45 as 4 62 102 هه - 20 10 is 17 40 - Nmshot 31.66 25.5 90 ano 28 132 182 22 30133 186 186 236 su 26.57 33.71422 be C) - a) e) freed cost = so 26 P=42, froin profit me a when 0=6 Profit = 42/60-186= 252-186 = 66 26 P=17, o=4, Profi =1714)_100 = 6-34 som en pens will exits & supply chowe shift to the left, increasing price. reins shutdower price = men of AVC g) shal dowen preie = $15. Penie - min of AC= 25.5 where all frin com zero aconomie profit in long run.