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What is the level of profit or loss for the firm

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Reference no: EM131764830

A firm is producing 100 units of its product. At this level of output the AVC=$60, and the ATC=$80. The firm is a price taker and the price for its product is $100. Assuming that the firm is maximizing profits and that labor is the only variable input. From this information:

  1. Calculate the fixed costs of the firm.
  2. Calculate the profits and rents of the firm.

Be sure to show your work.

  1. Given your answers in (b), in one or two sentences, explain the difference between profit and rent.
  2. Sketch the profit maximizing equilibrium described in the problem in a graph. Be sure to clearly show your answers in (b).
  3. Assume production abides by a three-stage production function. Is the firm producing where ATC are at a minimum? Explain your answer with your graph in (d).

Suppose a monopolist faces a demand curve given by P = 25 - 1/2 Q and total cost curve given by TC = 100 + 10Q. First, use this information to derive equations for marginal revenue, marginal cost, and average total cost. Then graph these equations, along with the demand curve. Find the profit-maximizing price and output. What is the level of profit or loss for the firm at this price?

Reference no: EM131764830

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