Attributed to Libby Rittenberg and Timothy Tregarthen Saylor.org equals marginal revenue.. These curves labeled MC and MR2 intersect in Panel b at an output of 4,444 pounds of radishes p
Trang 1Attributed to Libby Rittenberg and Timothy Tregarthen Saylor.org
equals marginal revenue These curves (labeled MC and MR2) intersect in
Panel (b) at an output of 4,444 pounds of radishes per month
Figure 9.8 Suffering Economic Losses in the Short Run
Tony Gortari experiences a loss when price drops below ATC, as it does
in Panel (b) as a result of a reduction in demand If price is above AVC,
however, he can minimize his losses by producing
where MC equals MR 2 Here, that occurs at an output of 4,444 pounds
of radishes per month The price is $0.18 per pound, and average total
cost is $0.23 per pound He loses $0.05 per pound, or $222.20 per
month
When producing 4,444 pounds of radishes per month, Mr Gortari faces an
average total cost of $0.23 per pound At a price of $0.18 per pound, he
loses a nickel on each pound produced Total economic losses at an output
of 4,444 pounds per month are thus $222.20 per month (=4,444×$0.05)
No producer likes a loss (that is, negative economic profit), but the loss
solution shown in Figure 9.8 "Suffering Economic Losses in the Short
Run" is the best Mr Gortari can attain Any level of production other than