a The profit maximizing output for the firm is b The price

a. The profit maximizing output for the firm is _____

b. The price the firm is selling the product for is ____

c. The total revenue for the firm is _____

d. The total profit/loss for the firm is ____

MC 18- ATC AVC 12 a 10 200 30 350 Quantity MR

A firm maximizes profit when it produce that level of output corresponding to which marginal revenue equals marginal cost.

The given figure shows that MR curve intersects MC curve corresponding to output of 200 units.

So, the profit-maximizing level fo output is 200 units.

Price corresponding to 200 units (with respect to demand curve) is $15 per unit.

ATC corresponding to 200 units is $18.

(a)

The profit-maximizing output for the firm is 200 units.

(b)

The price the firm is selling the product for is $15 per unit.

(c)

Calculate the total revenue -

Total Revenue = Price * Quantity = 200 * $15 = $3,000

The total revenue for the firm is $3,000.

(d)

At profit-maximizing level of output (200 units) ATC is greater than price.

So, firm is incurring loss.

Loss = (ATC * quantity) - (Price * quantity) = ($18 * 200) - ($15 * 200) = $3,600 - $3,000 = $600

The total loss for the firm is $600.