Graph the AT C, AV C, MC, and MR curves in a single graph, and indicate the profit maximizing level of output. If there are profits, shade the region corresponding to profit and label it. (b) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, T R, T C, and π? (c) If fixed costs increase from 100 to 500, should the firm continue to operate in the short-run? What about the long-run?
Graph the AT C, AV C, MC, and MR curves in a single graph, and indicate the profit maximizing level of output. If there are profits, shade the region corresponding to profit and label it. (b) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, T R, T C, and π? (c) If fixed costs increase from 100 to 500, should the firm continue to operate in the short-run? What about the long-run?
Chapter9: Perfect Competition
Section: Chapter Questions
Problem 8WNG
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Consider a competitive firm with total costs given by T C(q) = 100 + 10q + q^2. The firm faces a market price p = 50.
(a) Graph the AT C, AV C, MC, and MR
(b) If fixed costs increase from 100 to 500, what happens to the profit maximizing level of output, T R, T C, and π?
(c) If fixed costs increase from 100 to 500, should the firm continue to operate in the short-run? What about the long-run?
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