Question

Answer the following questions to the best of your ability.

=−.+.
=10−0.06 + 0.000152
=−.+. +


Answer the following questions:
1. At what value of q is AVC at its minimum? (Hint: The easiest way to
calculate this value is to solve AVC - MC = 0 for q.)
2. At the above output level what value does AVC take?
3. If the forecasted price of the firm's output is $10 per unit:
a How much output will the firm produce in the short run?
b How much profit (loss) will the firm earn)?
4 If the forecasted price is $7 per unit:
a How much output will the firm produce in the short run?
b How much profit (loss) will the firm earn)?

Answer 1

To find the value of q at which AVC is at its minimum, solve AVC - MC = 0. At this output level, find the value of AVC. For a given forecasted price, determine the firm's output level and calculate profit/loss by considering the difference between the price and ATC.

Step-by-step explanation:

1. The easiest way to find the value of q at which AVC is at its minimum is by solving AVC - MC = 0. By setting AVC - MC to 0, we can find the q value at which AVC is at its minimum. This is the q value where the firm is producing at the lowest average variable cost.
2. At the output level where AVC is at its minimum, we can find the value of AVC by substituting the q value into the AVC equation.
3. a. To find the output the firm will produce in the short run when the forecasted price is $10 per unit, we need to compare the price with the AVC and MC curves. If the price is higher than both the AVC and MC, the firm will produce at the output level where MC = AVC = P. b. To calculate the profit or loss, we need to subtract the total cost from the total revenue. The profit or loss will depend on the difference between the price and the ATC.
4. a. Similarly, when the forecasted price is $7 per unit, we need to compare the price with the AVC and MC curves to find the output level. b. To calculate the profit or loss, we subtract the total cost from the total revenue, taking into account the difference between the price and the ATC.