Asked by
Madison Winslow
on Dec 11, 2024
Verified
Suppose product price is $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this competitive price-taker firm to do?
A) Increase output.
B) Decrease output.
C) Shut down operations.
D) Stay at the current output; the firm is earning a profit of $400.
E) Stay at the current output even though the firm is losing $200.
Marginal Revenue
The increased income from the sale of one additional unit of a good or service.
Average Fixed Cost
Total fixed cost divided by the number of units produced. It always declines as output increases.
- Evaluate scenarios to ascertain the best output quantities for firms that are price-takers.
- Implement the concept of marginal revenue and marginal cost in decision-making scenarios within price-taker markets.
- Analyze economic frameworks and data matrices to compute profit, loss, and optimal output quantities.
Verified Answer
RM
Learning Objectives
- Evaluate scenarios to ascertain the best output quantities for firms that are price-takers.
- Implement the concept of marginal revenue and marginal cost in decision-making scenarios within price-taker markets.
- Analyze economic frameworks and data matrices to compute profit, loss, and optimal output quantities.