competitive frow shows the total cost and total revenue figures for Pizzaiolo, a
ID: 1122769 • Letter: C
Question
competitive frow shows the total cost and total revenue figures for Pizzaiolo, a perfectly Assume that trdcng pizza. Use this information to answer the following questions. 2. The table below the that the market price is 59 per pizza Quantity Total TotalTotal Marginal Marginal AverageAverage ariable Cost (TC) Reveme Revenue Cost Cost (TR)(MR(MC) Total Variable Cost (O Cost ATC)(AVC) $8 SO 10 18 3.67 27 36 45 54 3 1.25 2.2 3.17 4.14 13 3.8 4.5 5.29 8 279 63 a. (1 point] What must total fixed cost (TFC) be equal to?TFC-S8 19 10 29 37 b. (3 points) Fill in the table for total variable cost (TVC), marginal revenue (MR), and marginal cost (MC). Remember to put marginal items in between units maximize profits? d. (2 points) Fill in the remaining columns in the table above, for average total cost (ATC) and e. (l point Given the market price of $9 per pizza, how much will Pizzaiolo produce to The firm will produce -6-pizzas. average variable cost (A VC). Where needed, round to two decimal places. e. (1 point) When the market price is $9 per pizza, calculate Pizzaiolo's profits (or losses). Pizzaiolo's profits will be S 5427945) x6-27 f. (I point) What is Pizzaiolo's break-even price? Price = $ 3.25 per pizza g. (1 point) How low could the price go before Pizzaiolo will choose to shut down in the short run? Price $ 1 per pizzaExplanation / Answer
f. Break even price is the one where TR = TC. When Q = 1,TR =TC = 9. Since, Q=1 is sold, P = TR/Q = 9/1 = $9 must be the price for breaking even
g. The shut down point by definition is the minimum of AVC. In this case it is $1 per unit till Q =3.
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