Question: Use the graph to answer the free - response question. Show any calculations and be sure to label your response. A market graph shows quantity
Use the graph to answer the freeresponse question. Show any calculations and be sure to label your response.
A market graph shows quantity on the horizontal axis and price in dollars on the vertical axis. A curve labeled MC swoops downward then upward to the right. A u shaped curve labeled ATC intersects MC at units, dollars. Another u shaped curve labeled AVC is below ATC. AVC intersects MC at units, dollars. Additional points on the MC line are identified units, dollars; units, dollars; units, dollars.
Assume that the firm above operates in a perfectly competitive market.
Which labeled prices could be the market price if this firm is earning positive economic profits?
Explain how the shortrun prices from part a could get to the longrun equilibrium price level.
At which labeled prices from the graph would the firm operate in the short run but leave the market in the long run?
If the shortrun market price is $ what will this firm's total revenue be
If the government instituted a perunit tax, which curves above would move?
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