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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 profit-maximizing 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.

Respuesta :

azikennamdi

A) the number of jackets to be produced to maximize profit is 35 (the point above the intersection of the Marginal Cost (MC) and the Average Total Cost (ATC).

What is the Average Total Cost?

Average Total Cost (AVC) is computed by dividing the total quantity produced by the total cost used in producing it.

B) The firm will be Indifferent at the point where MC = ATC because at least, it is able to cover sunk costs. At the point where MC = AVC however, it will most likely shut down because it is now incurring losses. Revenue is no longer sufficient at this point to cover Average Total Costs, how much more Average Variable Cost.

C) with regards to profits or losses:

  • At Price A (where Price is above the intersection between MC and ATC), the company will make a profit.
  • At point B (where MC = ATC), the company will break even.
  • At point C (where the MC = AVC), the company will make a loss.

See the link below for more about Average Total Costs:

https://brainly.com/question/25799822

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