The graph below shows the costs and revenue curves for Dollar-Daze, a typical profit-maximizing firm in...

 

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The graph below shows the costs and revenue curves for Dollar-Daze, a typical profit-maximizing firm in a perfectly competitive market producing Good X. Answer the following questions based on the graph below. (20 points) Price, Cost ($) 26 21 20 14 198 0 MC 10 ATC AVC d = MR Quantity a. Calculate the firm's fixed cost. Show your calculations. b. Identify the price and profit maximizing quantity of Good X for Dollar-Daze. c. Calculate the economic profit at the quantity identified in part (b). d. As the market for Good X moves into the long-run equilibrium, explain what will happen to the price of Good X and why. e. Assume the cross-price elasticity of demand between Good X and Good B is positive, what will happen to the quantity demanded of Good B given the change in the long-run price of Good X in part (d)? The graph below shows the costs and revenue curves for Dollar-Daze, a typical profit-maximizing firm in a perfectly competitive market producing Good X. Answer the following questions based on the graph below. (20 points) Price, Cost ($) 26 21 20 14 198 0 MC 10 ATC AVC d = MR Quantity a. Calculate the firm's fixed cost. Show your calculations. b. Identify the price and profit maximizing quantity of Good X for Dollar-Daze. c. Calculate the economic profit at the quantity identified in part (b). d. As the market for Good X moves into the long-run equilibrium, explain what will happen to the price of Good X and why. e. Assume the cross-price elasticity of demand between Good X and Good B is positive, what will happen to the quantity demanded of Good B given the change in the long-run price of Good X in part (d)?

Answer rating: 100% (QA)

a Fixed cost is the vertical distance between ATC and AVC curves at output quantity 0 This is the ve... View the full answer