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Consider a firm which sells its product in a perfectly competitive market where the market price is $4.20 per unit. The firms in the market have identical cost structures and is described by the following equations: $\text{TC} = 40 + 0.1q^2 - 0.2q$ $\text{ATC} = \frac{40}{q} + 0.1q - 0.2$ $\text{MC} = 0.2q - 0.2$ $\text{AVC} = 0.1q - 0.2$ Suppose consumers' income decreases, and consumers view this good as a normal good. As a result, (ceteris paribus) the new market price is either $3.20 or $5.20. 1. Given the new market price, the firm's profit-maximizing level of output is. in the first blank space: decrease | increase | not change in the second blank space: a numerical value As a result of the market price change, the firm should expect its profit to by $.

          Consider a firm which sells its product in a perfectly competitive market where the market price is $4.20 per unit. The firms in the market have identical cost structures and is described by the following equations:
$\text{TC} = 40 + 0.1q^2 - 0.2q$  $\text{ATC} = \frac{40}{q} + 0.1q - 0.2$  $\text{MC} = 0.2q - 0.2$  $\text{AVC} = 0.1q - 0.2$
Suppose consumers' income decreases, and consumers view this good as a normal good. As a result, (ceteris paribus) the new market price is either $3.20 or $5.20.
1. Given the new market price, the firm's profit-maximizing level of output is.
in the first blank space: decrease | increase | not change
in the second blank space: a numerical value
As a result of the market price change, the firm should expect its profit to by $.

Consider a firm which sells its product in a perfectly competitive market where the market price is 4.20 per unit. The firms in the market have identical cost structures and is described by the following equations:TC = 40 + 0.1q^2 - 0.2qATC = (40)/(q) + 0.1q - 0.2MC = 0.2q - 0.2AVC = 0.1q - 0.2Suppose consumers' income decreases, and consumers view this good as a normal good. As a result, (ceteris paribus) the new market price is either3.20 or 5.20.
1. Given the new market price, the firm's profit-maximizing level of output is.
in the first blank space: decrease | increase | not change
in the second blank space: a numerical value
As a result of the market price change, the firm should expect its profit to by.

Added by Timothy R.

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