For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the loss-minimizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Output Produce or Shut Down? Profit or Loss? (Dollars per jacket) (Jackets) 15 20 25 55 70 85 On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) 100 90 Firm's Short-Run Supply 80 70 60 50 40 30 20 10 10 20 30 40 50 60 70 80 90 100 QUANTITY OF OUTPUT (Thousands of jackets) PRICE (D oll ars per jacket)
For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the loss-minimizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Output Produce or Shut Down? Profit or Loss? (Dollars per jacket) (Jackets) 15 20 25 55 70 85 On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: You are given more points to plot than you need.) 100 90 Firm's Short-Run Supply 80 70 60 50 40 30 20 10 10 20 30 40 50 60 70 80 90 100 QUANTITY OF OUTPUT (Thousands of jackets) PRICE (D oll ars per jacket)
Chapter23: Profit Maximization
Section: Chapter Questions
Problem 6E
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