courses.aplia.com Aplia: Student Course Home Consider a firm that produces polo
ID: 1138030 • Letter: C
Question
courses.aplia.com Aplia: Student Course Home Consider a firm that produces polo shirts in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) Aplia: Student Question Chegg Study | curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run price-searcher equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. 100 T 90 80 70 60 Min. ATC 50 40 30 20 10 MR Demand 0 10 20 304 70 0100 QUANTITY (Thousands of shirts)Explanation / Answer
Answer:
The price-searcher market is known as Monopoly. It maximized its profit when MC=MR.
Because of this a price searcher market, you can tell in the long run by the fact that P=ATC at the optimal quantity. Furthermore, the quantity that firms produce in the long run is less than efficient scale.
( In the long run, an efficient scale of production is where the marginal cost intersects total cost curve. )
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