The following graph plots daily cost curves for a firm operating in the competitive market for jumpsuits.PRICE (Dollars per jumpsuit)50453525201510002MC4ATCAVC80O Search101214QUANTITY (Thousands of jumpsuits)1613 20?C The following graph plots daily cost curves for a firm operating in the competitive market for jumpsuits.PRICE (Dollars per jumpsuit)50453525201510002MC4ATCAVC80O Search101214QUANTITY (Thousands of jumpsuits)1613 20?C

Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price (Dollars per jumpsuit) 12.50 27.50 45.00 Quantity (Jumpsuits) Total Revenue (Dollars) Fixed Cost (Dollars) 135,000 135,000 135,000 Variable Cost (Dollars) Profit (Dollars) If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $135,000 per day. In other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per jumpsuit.

Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price (Dollars per jumpsuit) 12.50 27.50 45.00 Quantity (Jumpsuits) Total Revenue (Dollars) Fixed Cost (Dollars) 135,000 135,000 135,000 Variable Cost (Dollars) Profit (Dollars) If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $135,000 per day. In other words, if it shuts down, the firm would suffer losses of $135,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per jumpsuit.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

Section: Chapter Questions

Problem 41P: Compute the average total cost, average variable cost, and marginal cost of producing 50 and 72...

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