A firm in a perfectly competitive market will produce no output in the short run if the price is below $20 but will produce if the price is above $20. The smallest quantity they will produce in the short run is 6.
A firm in a perfectly competitive market will produce no output
in the short run if the price is below $20 but will produce if the price is above $20. The smallest quantity they will produce in the short run is 6. Firms will earn 0 economic profit if the price is $447.5 and its profit maximizing quantity is 21 at that price. The firm’s fixed cost is $6615. Assume the good can be produced in continuous quantities.
Draw a picture of the MC, ATC, and AVC for this firm specifically labeling the values for each of these costs at q = 21 and q = 6. Round any decimal answers to 1 place. The diagram does not need to be to scale but needs the curves to exhibit the correct qualities. (2 points)
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