Answer to Question #71544 in Microeconomics for Maryam

Question

a. What is your explanation on prevailing cost conditions of the chosen firm?

b. Do you think that a reduction in the firm’s variable cost would be beneficial for the company in the short run? If yes, why, If no, why not?
c. Suggest how the firm can reduce the total cost of production?
e. What is the relation between the firm’s output and its marginal cost?
f. Draw graphs for MC, TC and MR and compare.

Answer 1

a. Prevailing cost conditions of the chosen firm depend on different factors.
b. A reduction in the firm’s variable cost would be beneficial for the company in the short run, if it is possible and if firm maximizes its profits.
c. The firm can reduce the total cost of production if it produces at minimal ATC.
e. The firm should produce such output, for which its marginal cost equals market price and marginal revenue MC = P = MR.
f. We have no available data to draw graphs for MC, TC and MR.