Assume that the price of silk ties in a perfectly competitive market is $21 and that the typical firm confronts the following costs:
a. What is the profit-maximizing rate of output for the firm? (Use the profit-maximizing rule.)
b.. How much profit does the firm earn at that rate of output?
c. If the price of ties falls to $7, how many ties should the firm produce?
d. At what price should the firm shut down?
Ans:
A. 8 ties per day (p=mc) if price of ties is 21 then it will be 8 units
B. $46
C. 1 ties per day
D. less than 7
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