Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 14 - Part V - Firms in Competitive Markets - Questions for Review - Page 296: 3

Answer

Please see the graph.

Work Step by Step

The firm chooses a level of output so that the average total costs are minimized. The price is the same as the marginal revenue. When the average total cost is minimized, the quantity produced is $Q_{0}$, and the price is $P_{0}$. The cost of each unit is $C_{0}$, which is where the average total cost is minimized. Total revenue is $P_{0}*Q_{0}$.
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