SRMC LRMC LRAC SAC 80 65 60 40 0 50 60 OUTPUT Figure 8.7.3 3) Refer to Figure 8.
ID: 1118886 • Letter: S
Question
SRMC LRMC LRAC SAC 80 65 60 40 0 50 60 OUTPUT Figure 8.7.3 3) Refer to Figure 8.7.3 above. At P-$80, the profit-maximizing output in the short run is:3) A) 22. B) 50. C) 64. D) 34. E) 39 4) Refer to Figure 8.7.3 above. At P-$80, how much is profit in the short run? 4) A) $306 B) $351 C) S1000 D)$88 E)$1024 5) Refer to Figure 8.7.3 above. If the firm expects $80 to be the long-run price, how many units of output will it plan to produce in the long run? A) 22 B)64 C)38 D)50 6) Refer to Figure 8.7.3 above. 5) E) 34 How much profit will the firm earn if price stays at $807 6) A) $306 B)$O C)S312 D) $1024 E) $1000 7) Refer to Figure 8.7.3 above. As the competitive industry, not just the firm in question, moves toward long-run rium, how much profit will the firm earn? 7)Explanation / Answer
Answer 3 - According to the diagram, In the short run price equal to $80. SRMC is equal to the MR at output level 39 units. This is profit maximizing output in the short run.
Option E is the correct answer.
Answer 4 - Price in the short run P = $80 and SAC = 71
Profit = Q (P - SAC)
Profit = 39 (80 -71)
Profit = $351
Option B is the correct answer.
Answer 5 - The firm expects price in the long run equal to $80 per unit then output will be 64 units. LMC cut MR curve at the output level of 64 units.
Option B is the correct answer
Answer 6 - In the long run firm is earning positive profit here. Price is $80 per unit and long average total cost is $64 per units. Then long run profit is ,
Profit = Q (P - LAC)
Profit = 64 (80 - 64)
Profit = 64 * 16
Profit - $1024
Option D is the correct answer.
Answer 7 - If the industry is moving towards long run equilibrium then all firms will earn normal profit in the market. All firms will work on that output level where their ATC is minimizes. It means all firms work at minimum point of LAC curve. These firms will zero economic profit.
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