Compute and indicate the area of profits on your graph

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Reference no: EM1359076

A competitive firm is maximizing profits by producing 250 units of output at the current market price of $1000
per unit. The firm has AFC of $300 and total costs of $300,000 at this output level.

a) Draw a graph showing all the relevant cost and demand curves. That is, include the MR, MC, AVC, and ATC curves.

b) Calculate FC, VC, ATC, AVC, MC, TR, and MR.

c) Compute and indicate the area of profits on your graph.

d) In light of your answer above, does it make sense that this firm is "maximizing profits"? Explain precisely

Reference no: EM1359076

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