D1 MC D2 ATC 75 - 65 30 12 2750 3250 20 80 110 130 2. If a change in consumer pr
ID: 1107810 • Letter: D
Question
D1 MC D2 ATC 75 - 65 30 12 2750 3250 20 80 110 130 2. If a change in consumer preferences causes market demand to decrease to D2, price will now equal dollars. If the typical firm produces at all, it will maximize profit by producing units of output. The firm's total revenue will equal will earn a profit/ suffer a loss equal to dollars, Thus the firm will operate / shut down in the short run. In fact, the firm will operate in the dollars. Total cost will equal dollars. The firnm dollars. If the firm shuts down it will lose short run at any price above dollars. The firm's short-run supply curve is its curve above dollars. There are firms in this market.Explanation / Answer
55 where D2 intetsects S curve.
110 where MC intersects Price 55.
Firm's revenue = p *q = 55 * 110 = 6050
Tc = atc * q = 65 * 110 = 7150
Suffer loss because revenue is less than cost
Loss = 7150 - 6050 = 1100
40 Firm does not shut down if price is above avc = 40
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