The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. COSTS (Dellars) 72 04 8 50 24 16 . 0 D Price (Dollars per lamp) 12 36 48 60 MC D 6 10 ATC AVC 32 40 06 QUANTITY(Thousands of lamps) 40 04 For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will eam a profit, incur a loss, or break even at each price. Quantity (Lamps) 72 (2) Produce or Shut Down? Profit or Loss?

The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. COSTS (Dellars) 72 04 8 50 24 16 . 0 D Price (Dollars per lamp) 12 36 48 60 MC D 6 10 ATC AVC 32 40 06 QUANTITY(Thousands of lamps) 40 04 For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will eam a profit, incur a loss, or break even at each price. Quantity (Lamps) 72 (2) Produce or Shut Down? Profit or Loss?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 11PA: Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2...

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What two lines on a cost curve diagram intersect at the shutdown point?
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