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Cost Curves: Quantity

1) The table shows production quantities (Q), average variable costs (AVC), average costs (AC), marginal costs (MC), price (P), marginal revenue (MR), total revenue (TR), total costs (TC) and profits for a firm. 2) Total profit for the firm is Rs. 108.72. So the firm will enjoy economic profits. 3) For a price of Rs. 35, total profit is negative Rs. 177.84. The contribution margin (TR - TVC) is also negative Rs. 36.4. So the firm must shutdown its operations.

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Ammar Akhter Uz Zaman
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19 views1 page

Cost Curves: Quantity

1) The table shows production quantities (Q), average variable costs (AVC), average costs (AC), marginal costs (MC), price (P), marginal revenue (MR), total revenue (TR), total costs (TC) and profits for a firm. 2) Total profit for the firm is Rs. 108.72. So the firm will enjoy economic profits. 3) For a price of Rs. 35, total profit is negative Rs. 177.84. The contribution margin (TR - TVC) is also negative Rs. 36.4. So the firm must shutdown its operations.

Uploaded by

Ammar Akhter Uz Zaman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Q4

Q AVC AC MC P MR TR TC Total Profit Marginal Profit


9 41.10 52.21 30.70 261.00 50.00 2349 469.89 1879.11 19.30 Cost Curves
10 40.00 50.00 30.10 261.00 50.00 2610 500 2110 19.90 60.00
11 39.10 48.19 30.10 261.00 50.00 2871 530.09 2340.91 19.90
12 38.40 46.73 30.70 261.00 50.00 3132 560.76 2571.24 19.30
13 37.90 45.59 31.90 261.00 50.00 3393 592.67 2800.33 18.10
14 37.60 44.74 33.70 261.00 50.00 3654 626.36 3027.64 16.30 50.00
15 37.50 44.17 36.10 261.00 50.00 3915 662.55 3252.45 13.90
16 37.60 43.85 39.10 261.00 50.00 4176 701.6 3474.4 10.90
17 37.90 43.78 42.70 261.00 50.00 4437 744.26 3692.74 7.30
40.00
18 38.40 43.96 46.90 261.00 50.00 4698 791.28 3906.72 3.10
19 39.10 44.36 51.70 261.00 50.00 4959 842.84 4116.16 -1.70
20 40.00 45.00 57.10 261.00 50.00 5220 900 4320 -7.10

Cost ($)
30.00 AVC
AC
MC
Ans Q4 (B)
20.00
Total profit = 108.72

So the firm will Enjoy Economic Profits


10.00

0.00
0 5 10 15 20 25
Quantity

Cost Curves
60.00
Q AVC AC MC P MR TR TC Total Profit Marginal Profit
9 41.10 52.21 30.70 35.00 35.00 315 469.89 -154.89 4.30
10 40.00 50.00 30.10 35.00 35.00 350 500 -150 4.90
11 39.10 48.19 30.10 35.00 35.00 385 530.09 -145.09 4.90 50.00
12 38.40 46.73 30.70 35.00 35.00 420 560.76 -140.76 4.30
13 37.90 45.59 31.90 35.00 35.00 455 592.67 -137.67 3.10
14 37.60 44.74 33.70 35.00 35.00 490 626.36 -136.36 1.30
15 37.50 44.17 36.10 35.00 35.00 525 662.55 -137.55 -1.10 40.00
16 37.60 43.85 39.10 35.00 35.00 560 701.6 -141.6 -4.10
17 37.90 43.78 42.70 35.00 35.00 595 744.26 -149.26 -7.70
18 38.40 43.96 46.90 35.00 35.00 630 791.28 -161.28 -11.90
Cost ($)

19 39.10 44.36 51.70 35.00 35.00 665 842.84 -177.84 -16.70 30.00 AVC
20 40.00 45.00 57.10 35.00 35.00 700 900 -200 -22.10 AC
MC

20.00

Ans Q4 (C)

Total profit = 108.72


10.00
CM = TR - TVC = 490 - (37.6 x 14) = -36.4

So the firm must Shutdown its operation


0.00
0 5 10 15 20 25
Quantity

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