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What is the profit maximizing or loss-minimizing output

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Reference no: EM13235100

Warner & Sons is a manufacturer of three-ring binders, operating in a perfectly competitive industry. The table below shows the firm's cost schedule.

Quantity Variable Cost Total Cost

0 0 76

1 30 106

2 50 126

3 58 134

4 64 140

5 84 160

6 114 190

7 150 226

8 190 266

9 240 316


a. Warner is selling in a perfectly competitive market at a price of $40. What is the profit maximizing or loss-minimizing output?

b. Calculate the firm's profit or loss. Show computation.

c. Should the firm continue to produce in the short run? Explain.

d. Suppose the fixed cost remain at $76. If the price of three-ring binders falls to $8, what is the profit-maximizing or loss-minimizing output level?

e. Calculate the profit or loss. Should the firm continue to produce in the short run?

f. Suppose the fixed cost remains at $76. What is the price that corresponds to the shut down point?

g. Suppose the fixed cost remains at $76. What is the price that corresponds to the break even point?

Reference no: EM13235100

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