The following graph summarizes the demand and costs for a firm that operates in
ID: 1095259 • Letter: T
Question
The following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. Suppose the market price is at $28.
The following graph summarizes the demand and costs for a firm that operates in a perfectly competitive market. Suppose the market price is at $28. What level of output should this firm produces to maximize profits in the short run? What are the firm½s total costs and fixed costs at this level of output? What is the firm½s profit if it produces this level of output? Should this firm continue to operate or shut down at the current price level? At which price level, the firm makes zero profits? And when the price is below $______, the firm should not operate. Indicate the short run supply curve in the graph.Explanation / Answer
1. What level of output should this firm produces to maximize profits in the short run?
Ans: In short run to maximise profit MR=MC , Q = 7
2. What are the firm
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