Draw a graph for a CwDP firm which faces a demand curve showing Q = 0 at
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Question:
Draw a graph for a CwDP firm which faces a demand curve showing Q = 0 at P = $12, and Q=8 at P = $8, a SRMC curve which interests MR at Q = 8, and SRATC = $6 at Q = 8. What level of output should this firm produce? At that output would the firm make a profit, or loss? How much per unit and in total?
Using the same information from the previous question, assume the SRATC changes so that at Q=8 the firm incurs a loss of $2/unit but P>AVC by $2. Redraw the graph and determine the firm’s profit or loss. Will the firm produce in the SR?
Related Book For
Essentials of Statistics for Business and Economics
ISBN: 978-1305081598
7th edition
Authors: David Anderson, Thomas Williams, Dennis Sweeney, Jeffrey Cam
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