competitive fow shows the total cost and total revenue figures for Pizzaiolo, a
ID: 1122949 • Letter: C
Question
competitive fow 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 competitive firm the that the market price is 59 per pizza Quantity Total TotalTotal Marginal Marginal AverageAverage Cost Cost (TR)(MR(MC) Variable Cost TOReveue Revenue Total Variable Cost Cost (ATC) (AVC) SO xxxxxxXX XxXXxxXx XXxxX $8 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 19 279 10 29 37 63 a. (I point] What must total fixed cost (TFC) be equal to? TFC-$8 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 e. (l point Given the market price of $9 per pizza, how much will Pizzaiolo produce to maximize profits? The firm will produce 6 pizzas. d. (2 points) Fill in the remaining columns in the table above, for average total cost (ATC) and 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 542794.5) x6-27 f. (I point) What is Pizzaiolo's break-even price? Price S 3.25per 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) breakeven refers to a situation where a firms earn zero economic profit and we know profit=(P-AC)*Q
Thus when P=min of AC is breakeven and thus P=3.25
G) firms shut down when its not able to recover even the aveage variable cost and when price<min of AVC then firm shuts down. Thus P=1 or price less than 1 represent shut down in short run
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