1 Answer the following questions using the figure above a Wh

1. Answer the following questions using the figure above.

a. What is the optimal quantity of goods for the firm to produce?

b. What is the optimal price for the quantity of goods for the firm to produce?

c. What is the total revenuefor the firm?

d. What is the total cost for the firm?

e. What is profit/loss for the firm?

Dollars per unit $60 MC 56 52 48 40 36 32 28 24 20- MR ATC IAVC 12 4 100 50 200 250

Solution

Req a. Equilibrium quantity is 200 units (where MR curve intersects MCM curve) Req b: Equilbrium price is $ 40 Reqc: Total Revenue (200 units @$40): $ 8000. Req d: Average total cost : $ 24 per unit Total cost (200 units @ 24): $ 4800 Req e: Total profits: Total revenue 8000 Less: Total cost 4800 Total profits: 3200