You Should Do This Problem in Three Steps

question 240

Essay

You should do this problem in three steps. First: Fill in Table 1. Assume fixed cost is $1000 and price is $575.
Table 1:
Table 2:
Second: Draw a graph of the firm's demand, marginal revenue, average variable cost, average total cost, and marginal cost curves on a piece of graph paper. Be sure to label the graph correctly. On the graph, indicate the break-even and shutdown points and the firm's short-run and long-run supply curves. Third: Calculate total profit in the space below, then answer questions a through d.
(a) The minimum price the firm will accept in the short run is $_______. (b) The minimum price the firm will accept in the long run is $_______. (c) The output at which the firm will maximize profits is ______. (d) The output at which the firm will operate most efficiently is _______.

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Definitions:

Gold Medal

An award given for first place in a competition, often made of, or resembling, gold.

Interdependent Self-construal

A perspective in which individuals see themselves as interconnected with others and define their identity in the context of social relationships.

Mandatory Retirement

A policy or practice that requires employees to retire at a certain age regardless of their personal or professional circumstances.

Cultural System

A coherent set of beliefs, practices, symbols, and values shared by a group of people, which helps them interpret their world and interact within it.