Question

Given:

Price	Quantity	TR	MR	MC	TC	Profit
$15,000	0	0	----	----	20000	-$20,000
14,000	1	14000	14000	$2,000	22000	-8000
13,000	2	26000	12000	1000	$23,000	3000
12,000	3	36000	10000	1000	$24,000	12000
11,000	4	44000	8000	1000	$25,000	19000
10,000	5	50000	6000	$3,000	28000	22000
9,000	6	54000	4000	$5,000	33000	21000
8,000	7	56000	2000	8000	$41,000	15000
7,000	8	56000	0	$12,000	53000	3000
6,000	9	54000	-2000	20000	$73,000	-19000
5,000	10	50000	-4000	$30,000	103000	-53000
4,000	11	44000	-6000	40000	143000	-99000
3,000	12	36000	-8000	60000	203000	-167000

a) If this firm produces in the Short Run, determine its profit maximizing/loss minimizing price.

b) If this firm produces in the Short Run, state its profit maximizing/loss minimizing profit amount.

c) If this firm shuts down in the Short Run, determine its profit maximizing/loss minimizing profit amount. Please explain your answer.

Answer 1

a) If the firm produces in the short run, then its profit-maximizing price is 10000

b) Profit maximizing output = 5

c) If the firm shuts down, its loss amount = fixed costs = 20000