Suppose Veronica Sells Teapots in the Perfectly Competitive Teapot Market

question 105

Essay

Suppose Veronica sells teapots in the perfectly competitive teapot market.Her output per day and her costs are as follows:
$\begin{array}{|c|c|}\hline\text { Output per } & \\\text { Day }& \text { Total Cost } \\\hline 0 & \$ 20 \\\hline 1 & 32 \\\hline 2 & 37 \\\hline 3 & 48 \\\hline 4 & 61 \\\hline 5 & 75 \\\hline 6 & 92 \\\hline 7 & 113 \\\hline 8 & 136 \\\hline\end{array}$
Suppose the current equilibrium price in the teapot market is $20.To maximize profit,how many teapots will Veronica produce,what price will she charge,and how much profit (or loss)will she make? Draw a graph to illustrate your answer.Your graph should include Veronica's demand,ATC,AVC,MC,and MR curves,the price she is charging,the quantity she is producing,and the area representing her profit (or loss).

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