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Week 6 Assignment

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Economics
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Grantham University
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Week 6 Assignment
Firm Profit, Loss, and Shut Down Based upon the graph, answer the following questions:
1) What is the production level that will maximize the profit for the firm?
The production
When MR=MC, production level that will maximize the profit. In the given chart that
level is attained at 9 units of output.
2) What is the profit-maximizing price the firm will charge?
The profit-maximizing price is $16.
3) Will the firm incur an economic gain or economic loss?
As the price is lower than the ATC, the firm will incur an economic loss.
4) What will the dollar amount of economic gain or economic loss be?
TR= P*Q
=16*9 =144
TC=ATC*Q
=17.5*9 =157.5
profit=TR-TC
=144-157.5 =-13.5
5) What will be the price and quantity where the firm will shut down?
The quantity where the firm will shut down would be Q7. Similarly, the price would be
12 where the firm will shut down.

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Week 6 Assignment Firm Profit, Loss, and Shut Down Based upon the graph, answer the following questions: 1) What is the production level that will maximize the profit for the firm? The production When MR=MC, production level that will maximize the profit. In the given chart that level is attained at ...
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