Question

stions I through 10. Use the graph for a perfectly e graph for a perfectly competitive firm to answer questions I throue ATC Price (P) S16 MC AVC $13 $10-- $8 $6.50 60 100 Quantity (Q) If price - $10, the profit-maximizing/loss-minimizing level of output (Q) is 1) total revenue is equal to 2) total cost is equal to 3) $ and the firm has a loss equal to 4) $ If this firm does not produce in the short run, it will have a loss equal to 5) If price = $6.50 and the firm produces 60 units of output, total revenue will be equal to 6)$ total cost will be equal to 7) $_ , and the firm will experience a loss equal to 8) S If this firm does not produce in the short run, it will experience a loss equal to 9) S 10) because it must pay its fixed/variable - costs.

Answer 1

Answer

P=$10

The firm produces at MC=P

Q=100

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Total revenue =P*Q=10*100=$1000

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Total cost =ATC*Q=13*100=1300

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Loss =total cost -total revenue =1300-1000=$300

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The loss at no production is equal to the fixed costs.

Fixed costs = (ATC-AVC)*Q= (13-8)*100=$500

The loss is $500

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P=$6.5

Total revenue =6.5*60=390

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Total cost =16*60=960

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Loss =TC-TR=960-390=570

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The loss is equal to fixed cost and the fixed cost is same at all output levels so it is same as the last calculated amount $500

Loss=$500

As fixed costs should be paid.