Question

Task #6 There are 4 companies (A, B, C and D). Based on the data provided below, calculate profit/loss of each company and find out if the companies will continue to produce, or they will stop production (explain the answer) 1) Company A: P-4. TR-8000, TFC-500. TVC=7800. 2) Company B: Q=1000, TR=3000, TFC=500, ATC-4. 3) Company C: P=30, TFC=2100, TVC-2900. ATC=50. 4) Company D: TR-6000, TFC-1000. ATC=35, AVC-30.

Please answer fast

Answer 1

To calculate profit / loss we have to subtract total costs from total revenue(TR). Total costs (TC) include both total variable costs ( TVC) as well as total fixes costs (TFC).

The following can be used to perform the calculations :

Profit = PQ - TFC-TVC = TR - TC

ATC = TC×Q AFC= TFC×Q ATC= TVC×Q

In the short run, the firm is going to produce as long as the price is greater than or equal to AVC i.e. p >= AVC .

TR S000 TFC 500 TVC 7800 Prait TR- T C TFC TVC 8000-8300 8 000 78 O0-S0o 300 23 Loes 300 2000 TR 000, Here 7800 3.9 AVC 2 000 JU wiu enc iim Sinc Py AvC Produ ce tontinuu to

ATC- 500 1000 TFC TR BDOO Protit (TFCTvc) BooD ATC TFe+ Tve) TC/8 (s00 t T ve)/1000 4000 500 Tvc 3500 TVC 3000 Profil 2000- 500t3S00) DK al IDOO 8500 3,S NOu TVC AvC = B000 TR : 2 1000 Stncu herejor, fim co No longu pbeluce P< AVC ATC= 50 TFC 2100 TVC 290 b Profit TR TFC TVC ATC TC 50 TFC +TV C 2l00 +24 o 5000 TC 5000 ATC= TC 50 NOw PO- Bu)CIoo) 3000 TR- Hunue 2100 290D 3000 TR TFC TVC Brofit 3000-S000 2000 there is a los ar o00 Hune

NOW AVC 2 900 TNC 100 C30> 29) ontnue Hente P AvC to produc murori Fium cou TR 600 0 AVC- 30 ATC 35 TFC: 1000 ATC = AVC f AFC 35- 305 AFC 35 AFC AFC TFC= 100O TFC Q Hence, 1000 2D0 TFC A fC TVC= AUCXO- 30x200 Hence NOLD Prafit Potal Cost TR- 6000 TFC-TVC 6000-1000 6000 Thuu's a AvC 30 TR 30 296 is procucna at shut Anon cuo een podung Fuum P AVC, the Indligberant point e Predueny and pot