Ch24_PCgraphsQs

Ch24_PCgraphsQs - Label the profit maximizing output level...

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MICROECONOMIC PRINCIPLES Short Run Shut Down Decisions Use the two graphs below for firm 1 and firm 2 to answer all parts of the question below: firm 1 firm 2 MC 1 MC 2 P ATC 1 P ATC 2 AVC 1 AVC 2 MR 1 MR 2 q q a) Are these competitive firms? How do you know from the graphs? b) Explain in words how firm 1 will find the profit maximizing level of output and price?
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Unformatted text preview: Label the profit maximizing output level (q 1 *)and price (P 1 *) on the graph. c) Show the profits or losses for both firms on their respective graphs (shade the area and indicate if profits or losses). d) Should either firm shut down? Explain why or why not....
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This note was uploaded on 12/13/2010 for the course ECON 201 taught by Professor Egger during the Fall '06 term at Towson.

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