Calculate Average Total Cost
A perfectly Competitive firm is operating at a profit-maximizing level of output, q*. This output level is 500 units.
At this output level, the firm earns a Total Revenue of $3,000. At this output, the firm faces the following costs:
Total Fixed Costs of $1,200
Total Variable Costs of $3,300 and
(A) Solve for the Market Price. PE
(B) Solve for ATC (average total cost) at an output level of 1,000 units.
(C) Calculate the firm's profit. (Specify if this is positive or negative profit.)
Profit = _____
(D) Should the firm shut down or keep producing in the Short Run?
(E) Graph this, for the firm; indicate the demand curve the firm faces. Also indicate the MC, ATC, and AVC curves. Label q* on the quantity axis. Indicate the value of the ATC & AVC curves (and PE) at the level of output q*. (Label these values on the Price Axis. )
Draw in the Profit Box as well.