Please Explain in Detail how this work sheet is solved Step by step.Thank you PE
ID: 1109059 • Letter: P
Question
Please Explain in Detail how this work sheet is solved Step by step.Thank you
PERPECT COMPETITION IN THE SHORT-RUN Use the graph below of a profit-maximizing/loss-minimizing perfectly competitive firm to answer questions 1-8. Price $16 ATC MC $13 AVC $10 … $6.50 0 30 50 Quantity I. 2. 3. IfP-310, the profit-maximizing/loss-minimizing level of output is MP = $10, total revenue is $-S00 and total cost is $ If P =$10, this firm experiences a (profit or loss) Total fixed cost for this firm is equal to S 2S If this firm does not produce in the short run, it will suffer a loss equal to sS lf P = $6.50 and this firm produces at MR = MC, then total revenue is $ 95 total cost is $ ·bsu equal to $ an ugo - If P = $6.50, the firm will experience a loss equal to $ if it produces. If P 6.50, the firm has a choice between producing and incurring a loss equal to or shutting down and incurring a loss equal to$ firm should tolbwhExplanation / Answer
Answer
Q1
The perfectly competitive firm maximizes profit at MC=P
where
Q=50 units
Q2
Total revenue=P*Q=50*10=500
Total cost=ATC*Q=13*50=650
Q3
The profit=TR-TC
=500-650=-150
The firm faces loss of $150
Q4
FC=TC-VC
VC=AVC*Q=8*50=400
FC=650-400=250
The fixed cost is $250