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A firm has leased plant and equipment to produce video game cartridges, which can be sold in unlimited quantities at $21 each. The following figures describe the associated costs of production:
Rate of output (per day)
0 1
2
3
4
5
6
7
8
Total cost (per day)
$50 $55
$62
$75
$96
$125
$162
$203
$248
(a) How much are fixed costs?
(b) Draw total revenue and cost curves on the graphs here.
(c) Draw the average total cost (ATC), marginal cost (MC), and demand curves of the firm.
(d) What is the profit-maximizing rate of output?
(e) Should the producer stay in business?
( f ) What is the size of the loss if production continues?
(g) How much is lost if the firm shuts down?
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