This Question: 5 pts 23 of 30 (19 complete) This Test: 120 pts possible A m mor

Question

This Question: 5 pts 23 of 30 (19 complete) This Test: 120 pts possible A m mor able marg Suppose that the market price in a perfectly competitive industry is $50 per unit. 1.) Using the line drawing tool, draw the marginal revenue line given this price and label your line MR a. $6 per n b $6 per m MC 2.) Using the rectangle drawing tool, draw a rectangle showing the area of profit or loss of the firm and label t P/L ATC 70- AVC | ! Carefully follow he instructions above, and Only draw the required objects The firm is operating at an economic in the short per m d $5p AFC Quantity (per month per mc Click the graph, choose a tool in the palette and follow the instructions to create your graph. Which c -Type here to search DELL 3 4 5 Caps Lock

Explanation / Answer

Since this is a perfectly competitive firm this means that the marginal revenue and the average revenue curves are horizontal lines at a price of $50. Also the prive that will be charged in perfect competition will be P=MC. The total revenue will thus be the rectangle where P=MC. Also the costs are where the line hits average total cost at the quantity where P=MC. The subtraction of the two gives the profits of the firm. At $50 as the P>ATC the firm operates with an economic profit in the short run.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.