Hi, can you please answer those questions using the table below. Thank you. PLEA

Question

Hi, can you please answer those questions using the table below. Thank you. PLEASE SHOW WORK.


Cost Function Practice Worksheet and Decision Making in the Purely Competitive Market 2. Assume the data from question 1 represents a purely competitive firm: a. Determine the units produced by this firm if P-$2.00. b. Calculate the firm's profit or loss if P-$2.00 c. Determine the units produced by this firm ir P-$3.25. d. Calculate the firm's profit or loss if P-$3.25. e. Determine the units produced by this firm if P=$6.50. f. Calculate the firm's profit or loss if P=$6.50. g. What happens in the long-run at each price if nothing changes?

Explanation / Answer

Answer
a)
P=2
Q=0
because the Average variable cost is greater than the price
so the firm will shut down in the short run and do not produce to minimize losses

b)
The profit at shut down is a loss equal to fixed cost
loss=$15

c)
P=3.25
Q=11
The firm produces at MC=P
it is at Q=11

d)
Profit=TR-TC
=11*3.25-43.25
=-7.5
The firm makes loss of $-7.5

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