Marginal cost Average cost Average cost Marginal cost Marginal Cost/Marginal Revenue ($) Marginal Cost/Marginal Revenue (3) Tola TEVE JOE Marginal revenue Marginal N revenue Total cost Total revenue - Total cost 0 10 20 30 40 50 60 70 80 90 100 0 10 20 30 40 50 60 70 80 90 100 Quantity (flash drives) Quantity (flash drives) (a) Price Intersects marginal cost above the average cost curve. (b) Price intersects marginal cost on the average cost curve. At a price of $4, price Is at a level where producing at the quantity At a price of $3.20, the price Is now at a level where producing at the where P - MG leads to a price that is above average cost. in this quantity where P - MC leads to a price that is equal to the average case, the firm is earning a profit. Total revenue is the quantity of 80 times the price of $4, or $320, shown by the overall shaded cost. Total revenue is now a quantity of 70 times a price of $3.20. To tal cost is the same: a quantity of 70 times an average cost of $3.20. box. Total cost is the quantity of 80 times an average cost of $3.30, Zero profit is being earned in this situation. or $264, shown by the bottom shaded box. The leftover rectangle where total revenue exceeds total cost is the profit earned. Total Fixed Variable Marginal Average Marginal cost Quantity Cos Cost Cost Cost Cost Average cost $62 $62 10 $62 $28 $2.80 $9.00 20 $11 $62 $48 $2.00 $5.50 LOS or negative 30 $126 $62 $64 Marginal Cost Marginal Raven $1.60 $4.20 40 $144 $62 582 $1.80 $3.60 Marginal 50 $166 $62 $104 $2 20 $3.32 revenue $192 $62 $130 $2.50 $3.20 Total revenue $224 362 $162 $3.20 $3.20 0 10 20 30 40 50 60 70 20 90 100 $264 $62 $202 $4.00 $3.30 90 Quantity (flash drives) $324 $62 $262 $6.00 $3.60 100 () Price intersects marginal cost below the average cost curve $404 $62 $342 $8.00 $4.04 "At a price of $2 20, when the firm produces at a quantity where PMC, the price is below average cost, Fiore, the firm is suffering losses Total costs are the large rectangle with a quantity of 50 and a price of $3.22, for lots poste of $168, Total revenues are a quantity of 50 and a price of $2 20 of $110, shown by the fanaller shaded box, The fellover rectangle an top it is shows the losses. that is, pie "amour that toul cool exceeds total revenue English (United States)