In the short run, at a market pnce of $8 per hoodie, this firm will choose to pr
ID: 1091789 • Letter: I
Question
In the short run, at a market pnce of $8 per hoodie, this firm will choose to produce hood'es per day On the previous graph, use the blue rectangle (circle symbols) to shade the area representing the firm's economic profit or loss if the market price Is S8 and the firm chooses to produce the quantity you already selected Tool tip- Mouse over the shaded region on the graph to see its area The area of this rectangle indicates that the firm would have of per day For each in the following table, calculate the firms optimal quantity of units produced and determine the economic profit or loss of it produces at that quantity, using the data from the previous graph to identify Its total vanable cost. Assume that If the firm is !ndifferent between producing and shutting down, it will produce (Note. You can mouse over the purple points (diamond symbols] on the previous graph to see precise information on average variable cost.) If a firm shuts down, it incurs its total fined costs (TFC) in the short run In this case, the total fixed cost of the firm produong blade hoodies «s $81,000 per dav In other words, if it shuts down, the firm would suffer losses of $81,000 per day until Its fixed costs end (such as the expiration of o building lease) This firm's shutdown p'ice-that is, the price below which it is optimal for the firm to shut down-Is per hoodie. Consider apurely purely competitive market for black hoodies. The following graph shows the daily cost curves of a non operating in this market. In the short run, at a market price of $8 per hoodie, this firm will choose to produce hoodies per day On the previous graph, use the blue rectangle (circle symbols) to shade the area representing the firm's economic profit or loss if the market pr.ee is S8 and the firm chooses to produce the quantity you already selected. Tool Op: Moose over the shaded region on the graph to see its areaExplanation / Answer
The firm will choose to produce 12 thousand hoodies per day.
loss of 60 thousand per day. (The ATC = $13 at 12 thousand hoodies per day. The Cost of producing hoodies is $13*12,000 = $156,000 and the revenue is $8*12,000 = $96,000)
The price below which it is optimal for the firm to shutdown is $6 per hoodie
P Q TR TFC TVC + or - 6 9000 54000 81000 54000 -81000 12 18000 216000 81000 135000 0 18 27000 486000 81000 270000 135000