Question

17.   Answer parts (a)–(e):

Assume fixed cost of $20 and a price of $15.

Table 3

Table 3T Average>Average Averagel Variable +Total >Fixed > Variable-+Total Marginal' Output ? Cost ? Cost ? Cost ? Cost ? Cost-) CostT 2 3 18 4422 528 639 756 15 IT

  

Fill in Table 3.

On a piece of graph paper draw the demand, marginal revenue, marginal cost, average variable cost, and average total cost curves. Label the shut-down and break-even points, and the short-run and long-run supply curves.

Answer each of these questions:

   (1)   In the short run, the lowest price the firm would accept would be $ _____.

   (2)   In the long run, the lowest price the firm would accept would be $_____.

   (3)   The firm's most efficient output is _____.

The output at which the firm will produce is _____.

Calculate total profit.

   (e)   Fill in Table 4.