Q

P

TFC TVC

TC

AVC

ATC

MC

TR

Profits

0 $28 $20 $0

$20

-

-

-

$0

−$20

1 $28 $20 $20 $40

$20.00 $40.00 $20 $28

−$12

2 $28 $20 $25 $45

$12.50 $22.50 $5

$56

$11

3 $28 $20 $35 $55

$11.67 $18.33 $10 $84

$29

4 $28 $20 $52 $72

$13.00 $18.00 $17 $112 $40

5 $28 $20 $80 $100 $16.40 $20.40 $28 $140 $40

TABLE 8.11

Step 5. Once you have determined the profit-maximizing output level (in this case, output quantity 5), you can

look at the amount of profits made (in this case, $40).

Step 6. If the firm is making economic losses, the firm needs to determine whether it produces the output level

where price equals marginal revenue and equals marginal cost or it shuts down and only incurs its fixed costs.

Step 7. For the output level where marginal revenue is equal to marginal cost, check if the market price is

greater than the average variable cost of producing that output level.

•

•
{"file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "producer": "Prince 14.2 (www.princexml.com)", "creationdate": "2022-12-07T14:15:44-06:00", "creator": "PDFMiner", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "file_size_mb": 26.99, "total_pages": 597, "uploaded_via": "batch_uploader", "file_type": ".pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "batch_upload": true, "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e", "file_name": "Microeconomics3e.pdf"}