Question

Let's consider a firm in a perfect competitive market. Regarding the production costs of this firm, we simply know that its minimum average variable cost is 4 euros per unit for an output  of 5 units, and that its minimum average total cost 5 euros per unit that is reached for an output of 6 units.


Represent a graph according to the following instructions and answer the questions that arise.


1.       Plot an average variable cost curve an average total cost curve and a marginal cost curve that could correspond to the previously mentioned cost conditions and identify them with the labels AVC, ATC and MC.


2.       Assume that the market price for the product is 5 euros per unit. In the same graph above, plot the marginal revenue curve that corresponds to this situation and label it as MR


3.       Determine the output this firm should produce in order to maximize profits and explain why.


4.       Represent in the graph the economic profit or loss this firm will obtain and explain how to calculate it


5.       Comment on whether the price of 5 euros per unit could remain in the long run and, if applicable, what the long run equilibrium price would be


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Answer 1

Respuesta:

Alberto traslado un cuadrilátero (figura de cuatro lados)

con vértices en D (3, 2), E (1, 3), F (6, 6) y G (3, 6), seis

unidades a la derecha. ¿Cuáles son las coordenadas de

los vértices de la figura obtenida?

Explicación paso a paso: