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- i. Calculate the marginal cost, marginal revenue and profit for each unit of production. ii. How many units should the firm produce to maximise profit?i. Calculate the marginal cost, marginal revenue and profit for each unitof production. ii. How many units should the firm produce to maximise profit?(1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…
- If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm _____.Price, marginal revenue, marginal cost, average total cost W D B MC U J KL ATC a) The firm's economic profit is area = b) Is this firm operating in the short or long run? MR Demand N Quantity (per period)Costs and Revenue MC ATC - AVC Quantity Discuss the firm plotted on the figure. What type of firm do you see? Is the firm operating at the optimal point of production? Is the firm making a profit? Is the firm operating in the short or in the long run?
- 50 MC ATC 30 MR 10 10 20 30 40 Quantity (per day) How much profit or loss does the firm make at the selected output level? 40 20 Price and costs (dollars)(A) Comment on marginal revenue and marginal cost values when it is given that marginal profit is 0. (B) Also comment on total profit value of the firm.11. Madibaz is a company that produces t-shirts. The firm operates in a highly competitive, industry and each t-shirt is priced at R80. Madibaz's marketing manager wants to determine the possible total profit for the year given the price and costs of production. The total cost equation is TC=25000 +0.025Q where Q is the number of t-shirts per year. Calculate Madibaz's total profit.