00:01
If the market price equals $7, the firm will produce the output where the marginal cost curve intersects the market price.
00:10
From the graph, we can see that the firm will produce output level of approximately 40 units per day.
00:22
If the market price equals $7, the average variable cost is approximately 4 .5 per unit and the marginal cost will be $5 per unit.
00:46
If the market price equals $7, the total variable cost at an output of 40 can be computed as follows.
00:56
It will be average variable cost multiplied by output which will be $4 multiplied by 40.
01:05
It will be $160.
01:08
Since the fixed cost is not given, we cannot calculate the total fixed cost.
01:12
However, we can compute the total cost as follows.
01:16
Total cost equals to average total cost multiplied by output which will be 4 .75 multiplied by 40 which is $190.
01:30
If the market price equals $7, the total revenue can be computed as follows.
01:37
It will be price multiplied by output which is $7 multiplied by 40 that is $280.
01:53
Economic profit can be calculated as total revenue less total cost which will be $280 less $190...