4. The diagram below depicts the revenues and costs of a firm producing vodka. a. What will...
Question:
4. The diagram below depicts the revenues and costs of a firm producing vodka.
a. What will the firm’s profit be if it decides to produce 20 units of output? 120 units?
b. Suppose the firm is producing 70 units of output and decides to cut output to 60. What will happen to the firm’s profit as a result?
c. Suppose the firm is producing 70 units of output and decides to increase output to 80. What will happen to the firm’s profit as a result?
d. At an output level of 70, draw a line tangent to the total cost curve. Does your line look similar to the total revenue curve? What does the slope of the total revenue curve indicate? What does the slope of the total cost curve indicate?
Step by Step Answer:
Microeconomics
ISBN: 9780716759751
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson