Solution-Label the point of profit maximization

Label the point of profit maximization

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Reference no: EM132502880

1. Now let's say Sarah's fishery faces the following revenues and costs. Market price is $25, to maximize profit she farms 200 fish a week. At the profit maximizing quantity, Average Total Cost = $20 a fish, Average Variable Cost = $15 a fish. The AVC min = $12 a fish.

A - Label the point of profit maximization.

B - On the graph, label Sarah's Supply Curve

C - Draw in the ATC curve that shows ATC = 20 at the profit maximizing level of output.

D - At profit maximization, what is the total revenue, total cost, variable cost, and profit?

E - If the price of salmon falls to $20 per fish, will Sarah continue to produce 200 salmon? Explain why or why not? Illustrate this price change on the graph.

F - If the price of salmon falls to $14 a fish, what will Sarah do (stay in business or shutdown)? Fully explain why, not just the rule? Also prove this mathematically.

Reference no: EM132502880

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Label the point of profit maximization

Reference no: EM132502880

Reference no: EM132502880

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