Question
1.Assume the market (or equilibrium) price is $4.00 a.Fill in the first Marginal Revenue column in the table above b.What quantity should this firm produce
1.Assume the market (or equilibrium) price is $4.00
a.Fill in the first Marginal Revenue column in the table above
b.What quantity should this firm produce to maximize profit?How do you know?
c.Calculate the profit this firm making at the quantity you chose in part (b).
2.Assume the market (or equilibrium) price is $2.50
a.Fill in the second Marginal Revenue column in the table above
b.What quantity should this firm produce to maximize profit?How do you know?
c.Calculate the profit this firm making at the quantity you chose in part (b).
d.What profit would the firm make if they shut down (that is, if they produced Q = 0)?
e.Should the firm continue to operate at the quantity you chose in part (b) or should the firm shut down (and produce a quantity of zero)? Explain why.
3.Assume the market (or equilibrium) price is $1.50
a.Fill in the third Marginal Revenue column in the table above
b.What quantity should this firm produce to maximize profit?How do you know?
c.What profit is this firm making at the quantity you chose in part (b)?
d.What profit would the firm make if they shut down (produced Q = 0)?
e.Should the firm continue to operate at the quantity you chose in part (b) or should the firm shut down (and produce a quantity of zero)? Explain why.
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