How do you draw the ATC curve and the MC curve for this Scenario? THE RESILIENTARMOUR...

How do you draw the ATC curve and the MC curve for this Scenario?

THE RESILIENTARMOUR Corporation is an American company that manufactures cost-effective protective covers for automobiles made out of innovative composite material, which currently are being sold only in the United States. ResilientArmour currently produces and sells 100,000 protective covers a month and operates its one factory at 60 percent capacity. At that output, the average total cost (ATC) of manufacturing a protective cover is $19.00. Experience has shown that the ATC decreases as output is expanded beyond 100,000 units per month but rises again if output is increased above 125,000 units per month.

THE RESILIENTARMOUR Corporation normally sells its protective covers domestically for $24.00 each. It recently received an order for an additional 10,000 protective covers per month from a buyer in a foreign country where THE RESILIENTARMOUR Corporation would like to do business. This buyer specified that it would pay no more than $14.00 per protective cover. The firm’s accountants estimate that at 110,000 units a month, the ATC of producing a protective cover would be $18.00. THE RESILIENTARMOUR executives want to accept the order.

ASSIGNMENT INSTRUCTIONS:

Draw the firm’s ATC curve and fit the MC curve to it. Then estimate MC at Q = 110,000. Use the profit-maximizing rules (assume P = MR for this paper) to answer the following questions:

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Draw the MR, MC, AVC, ATC, Demand, supply, MC and MR for the following situations. For...

Draw the MR, MC, AVC, ATC, Demand, supply, MC and MR for the following situations. For each of these situations show the total revenue, total cost area, and shade the profit or loss area, and if the situation is a shut down state why it should shutdown. a.A monopolist showing a profit b.A monopolist showing a loss but not a shut-down c.A monopolist at a break-even point d.Difference between a monopolist and a perfectly competitive firm for a profit situation...

If the ATC curve is continually declining, what does this imply about the MC curve?

1- Draw the short-run ATC, AVC and MC curves for a business.

1- Draw the short-run ATC, AVC and MC curves for a business. Show the supply curve with the prices at which a firm would breakeven and shutdown. Label everything.2- Show the price and quantity for a perfectly competitive firm that is making a loss in the short run. Also make sure to graph the marginal revenue, marginal, average total and average variable cost curves.

The MC (marginal cost) curve and the ATC (average total cost) curve intersect Group of answer...

The MC (marginal cost) curve and the ATC (average total cost) curve intersect Group of answer choices at the MC curve's maximum point at the ATC curve's maximum point at the ATC curve's minimum point at the MC curve's minimum point

If quantity equals 10,000 units at the lowest point on the ATC curve and MC equals...

If quantity equals 10,000 units at the lowest point on the ATC curve and MC equals MR at 12,000 units then the monopoly firm will typically choose to produce where per unit cost of production is at the minimum. True or False When regulating a monopoly, a problem with setting price equal to average cost is a deadweight loss exists because output is not at its socially optimal level in this market and there is no incentive for the monopolist...

If you were to graph the curves of MC and ATC (you don’t have to), what...

If you were to graph the curves of MC and ATC (you don’t have to), what would be significant about the point of intersection of the MC and ATC curves?

For a perfectly competitive firm, if MC = minimum ATC, then:

Now, draw (and label) a demand and MR curve, but add a marginal cost (MC) curve to the picture:

PRICEQUANTITYTOTAL REVENUE (TR)MARGINAL REVENUE (MR)$101$10$92$18$8$83$24$6$74$28$4$65$30$2$56$30$0$47$28$-2$38$24$-4$2$1910$18$10$-6$-81. Now, draw (and label) a demand and MR curve, but add a marginal cost (MC) curve to the picture:SHOW the profit-maximizing output for the monopolist, Q* (remember -- even though the market structure is different, all profit-maximizers follow the same rule . . . ).At Q* (the profit-maximizing output), show the PRICE that the monopoly firm will be able to charge its customers for that level of output.How does the monopolist's price compare to his/her...

1) Draw a Long-run ATC curve that reflects economies of scale. 2)Assume you own and operate...

1) Draw a Long-run ATC curve that reflects economies of scale. 2)Assume you own and operate an auto repair shop in which you work and employ Harriet, a mechanic whose skills are very similar to yours, at $45,000 per year. Also assume that you do not pay yourself but rather hope for a profit at the end of the year. A. Would the cost of your labor be an accounting cost? Explain. B. Would the cost of your labor be...

Summarize in one sentence the relationship between AVC and MC and between ATC and MC.

Subjects