ECON620 Homework Week 3 NAMIE 1. Refer to the graph below, which shows costs for

Question

ECON620 Homework Week 3 NAMIE 1. Refer to the graph below, which shows costs for a perfectly competitive company. Use this information to answer the questions below. MC 4.00 Price and costs 3.00 per unit 2.00 (dollars) ATC Ayc Re 1.00 0 5 10 15 20 25 Quantity of output (units per day) a. Assume that the market price is $4. The firm should sell units. At this level of output, their profit is b. Assume that the market price is $2. The firm should sell units. At this level of output, their profit is c. Assume that the market price is $1. The firm should sell units. At this level of output, their profit is Refer to the table helow which shows costs for the company Exotic Fruit that sells fruit baskets in a perfectly

Explanation / Answer

a) when price=4 then output=20 units sold and their profit=1.8*20=36

B)when price=2 then output=15 and the profit=0

C)when price=1 firm will sell output=0 and firm should shut down and loss=fix cost=5

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