The following graph represents the situation of Marguerite’s Caps, a firm selling caps in the perfectly competitive cap industry. In each part of this problem, be sure to show how you calculated your answer.

a. How much output should Marguerite produce to maximize her profit?
b. How much profit will she earn?
c. Suppose Marguerite decides to quit the cap industry and shut down. What would her loss be?

Transcribed Image Text:

Price and cost (dollars per cap) $11.00 9.00 6.00 MC AVC MR / 50 80 100 ATC Quantity (caps per day)