Question

for market Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point Profit or Loss u 40 AVC 0 5 015 20 25 30 35 40 45 50 QUANTITY (Thousands of ovens per day) In the short run, at a market price of $50 per oven, this firm will choose to produce Y ovens per day. On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $50 and the firm chooses to produce the quantity you already selected

Answer 1

Equilibrium is determined at the point where P=MC

When P=$50,firm will produce 37 units of the good.

The firm is incurring loss at this point because P

ATC=60

TC=ATC*Q

TC=60*37=2,220

TR=50*37=1,850

Loss=TC-TR

Loss=2,220-1,850=$370

Loss is represented by the shaded region.

Answer-37,loss,$370

mc