Answer to Question #82541 in Microeconomics for abigail

Question #82541
Assume that the following data is for a profit-maximizing manufacturer:

Quantity $Total Cost 0 100 1 140 2 160 3 190 4 240 5 300 6 370 7 450 8 550 a. Does this manufacturer operate in the short-run or in the long-run? Explain. b. If this manufacturer shuts down what would be the profit or loss? c. If the price is$75 per unit, what are the profit maximizing output and the level of profit or loss?
d. If the price is $55 per unit, what are the profit maximizing output and the level of profit or loss? e. What is the value of the break-even price? 1 Expert's answer 2018-10-31T13:52:09-0400 Q TC MC 0 100 - 1 140 40 2 160 20 3 190 30 4 240 50 5 300 60 6 370 70 7 450 80 8 550 100 a. This manufacturer operates in the short-run. b. This manufacturer shuts down if P < AVC and the loss is higher than his fixed costs. c. If the price is$75 per unit, then P = MR = MC = 75 and the profit maximizing output is 6 units and the level of profit is TP = TR - TC = 75*6 - 370 = $80. d. If the price is$55 per unit, then P = MR = MC = 55, the profit maximizing output is 4 units and the level of loss is TP = TR - TC = 55*4 - 240 = -$20. e. The value of the break-even price is: P = FC/Q + VC = TC/Q = ATC. At Q = 4: P = 240/4 =$60.

At Q = 6: P = 370/6 = \$61.67.

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