The average total cost and marginal cost curves for Blammo Enterprises are shown in this figure:

At what price will this firm be willing to sell 11 units?

Choose 1 answer:
(A) $\$ 89$
(B) $\$ 60$
(c) $\$ 38$
(D) $\$ 34$
(E) $\$ 58$

Question

The average total cost and marginal cost curves for Blammo Enterprises are shown in this figure:

At what price will this firm be willing to sell 11 units?

Choose 1 answer:
(A) $\$ 89$
(B) $\$ 60$
(c) $\$ 38$
(D) $\$ 34$
(E) $\$ 58$

Accepted Answer

∻Solution∻ ‖ a ⋮ Understanding the Relationship Between ATC and MC: The point where the MC curve intersects the ATC curve at its lowest point is known as the break-even point. At this quantity, the firm is covering all its costs, and the ATC is at its minimum. ‖ ‖ b ⋮ Determining the Willingness to Sell: A firm in a perfectly competitive market will be willing to sell additional units as long as the price it receives is at least equal to the marginal cost (MC) of producing those units. ‖ ‖ c ⋮ Applying the Concept to the Given Scenario: At 11 units, the MC is $89. This is the additional cost of producing the 11th unit, and the firm would be willing to sell the 11th unit at a price that covers this marginal cost. ‖ ∻Answer∻ ⚹ (A) $89 ⚹ ∻Key Concept∻ ⚹ Marginal Cost Pricing ⚹ ∻Explanation∻ ⚹ In a perfectly competitive market, firms are willing to sell additional units as long as the price is at least equal to the marginal cost of producing those units. ⚹◊What impact does the intersection of the Average Total Cost (ATC) and Marginal Cost (MC) curves have on the firm's pricing decision?⍭ Generate me a similar question◊

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