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Cs 32

1. The firm produces 14 units of output and earns a total profit of $108.72. 2. At the profit-maximizing level of output, the firm's total revenue exceeds its total variable costs, allowing it to earn economic profits. 3. If the price was lower at $35 per unit, the firm would shutdown production as its total revenue could no longer cover total variable costs at the output level that minimizes average total cost.

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Ammar Akhter Uz Zaman
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24 views1 page

Cs 32

1. The firm produces 14 units of output and earns a total profit of $108.72. 2. At the profit-maximizing level of output, the firm's total revenue exceeds its total variable costs, allowing it to earn economic profits. 3. If the price was lower at $35 per unit, the firm would shutdown production as its total revenue could no longer cover total variable costs at the output level that minimizes average total cost.

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 30.70 292.00 50.00 2628 469.89 2158.11 19.30 Cost Curves
10 40.00 50.00 30.10 292.00 50.00 2920 500 2420 19.90 60.00
11 39.10 48.19 30.10 292.00 50.00 3212 530.09 2681.91 19.90
12 38.40 46.73 30.70 292.00 50.00 3504 560.76 2943.24 19.30
13 37.90 45.59 31.90 292.00 50.00 3796 592.67 3203.33 18.10
14 37.60 44.74 33.70 292.00 50.00 4088 626.36 3461.64 16.30 50.00
15 37.50 44.17 36.10 292.00 50.00 4380 662.55 3717.45 13.90
16 37.60 43.85 39.10 292.00 50.00 4672 701.6 3970.4 10.90
17 37.90 43.78 42.70 292.00 50.00 4964 744.26 4219.74 7.30
40.00
18 38.40 43.96 46.90 292.00 50.00 5256 791.28 4464.72 3.10
19 39.10 44.36 51.70 292.00 50.00 5548 842.84 4705.16 -1.70
20 40.00 45.00 57.10 292.00 50.00 5840 900 4940 -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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