Economics 4. Profit maximization in the cost-curve diagramSuppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market.Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point.PRICE (Dollars per pan)100908070605040302010005MCATCAVC+10 15 20 25 30 35 40QUANTITY (Thousands of pans per day)4550Profit or Loss? In the short run, at a market price of $50 per pan, this firm will choose to produceOn 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 andthe firm chooses to produce the quantity you already selected.Note: In the following question, enter a positive number, even if it represents a loss.The area of this rectangle indicates that the firm'spans per day.would be $thousand per day in the short run.

When the market price, the marginal cost, and the demand curve are equal, perfectly competitive…

Suppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. PRICE (Dollars per pan) 100 90 80 70 50 40 30 20 10 0 0 5 MC ATC AVC 10 15 20 25 30 35 40 QUANTITY (Thousands of pans per day) 45 50 Profit or Loss ?

Suppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. PRICE (Dollars per pan) 100 90 80 70 50 40 30 20 10 0 0 5 MC ATC AVC 10 15 20 25 30 35 40 QUANTITY (Thousands of pans per day) 45 50 Profit or Loss ?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 23RQ: What two lines on a cost curve diagram intersect at the shutdown point?

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