B what is the value of the firms fixed costs c what

b. What is the value of the firm's fixed costs?
c. What is the equation for the firm's ATC curve?
d. Add the ATC curve to your graph in part a.
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a. The profit-maximizing price and quantity is found by setting MR =
MC:
� � 100 ? 2 Q = 20
� � Q = 40
� � P = 100 ? 40 = $60
b. Because this firm is in long-run equilibrium, economic profit is
zero.
� � Profit = TR ? TC = 0.
� � PQ ? (fixed costs + variable costs) = 0
� � $60 � 40 ? [fixed costs + ($20 � 40)] = 0
� � $2,400 ? $800 = fixed costs
� � fixed costs = $1,600
c. ATC = TC/Q = (1,600 + 20 Q )/ Q = 1,600/ Q + 20
d.