Question

 Refer to the above graph when answering the following questions.

 A) On the above diagram, indicate the long-run equilibrium (break-even ) point by labeling it E.

 B) The long-run equilibrium (break-even ) quantity is_______  units and the long-run equilibrium price is _______ 

 Assume a market price of $10 and a firm pursuing profit maximization.

 C) Given the market price of $10, on the above diagram, draw and label the perfectly competitive firm's demand curve

 D) Total revenue at the profit-maximizing output is:

 E) Total cost at the profit maximizing output is:

 F) Economic profits or losses are:

Answer 1

A. Point E marked above.

B. Long run eq qty = 24

Long run eq price = 7

C. Demand curve drawn with blue.

Average Cost marked with orange.

D. Total revenue = p * q

= 10 * 28

= $280

E. Total cost = ATC * q

= 8 * 28

= $224

F. Economic profits = total revenue - total cost

= 280 - 224

= $56