The hypothetical production data is for a profit maximizing firm. Suppose the ma
ID: 1157248 • Letter: T
Question
The hypothetical production data is for a profit maximizing firm. Suppose the market price falls from $200 to $182 and the firm does not shut down. Use this information and the table to match the labels. Output 0 100 200 300 400 500 Total fixed cost 10,000 0,000 0,000 0,000 0,000 0,000 Total variable cost S0 18,000 30,000 46,000 66,000 92,000 If the market price is $160, then the firm will shutdown. Since the firm is still operating, the firm must be earning a positive profit. If the price increases to $200, then the firm will earn a positive economic profit.Explanation / Answer
Ans A)
If the Market Price is $160 then for any level of production Revenue<Cost hence Firm will shut down
Ans B)
IF firm is operating then it mustnt be producing positive economic profit because at any level of output we have negaive profit
Ans C)
Firm will earn positive profit untill 400 level of output
beyond that it will have negative profit for example 500(200)<96000+10000=106000
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