Questions: n in the graph of this cherry producer. There are more labels than boxes. The average total cost (ATC), marginal cost (MC) marginal revenue (MR) curves are already labeled.

n in the graph of this cherry producer. There are more labels than boxes. The average total cost (ATC), marginal cost (MC) marginal revenue (MR) curves are already labeled.

Transcript text: $n$ in the graph of this cherry producer. There are more labels than boxes. The average total cost (ATC), marginal cost (MC) I marginal revenue (MR) curves are already labeled.

Solution

Solution Steps

Step 1: Identify the profit-maximizing output

The profit-maximizing output is where Marginal Cost (MC) intersects Marginal Revenue (MR). This is marked by the lower black dot on the graph where MC and MR cross. A dotted line goes down from this intersection to the x-axis, indicating the quantity.

Step 2: Identify Market Price

The market price is where the profit-maximizing quantity intersects the demand curve. Since MR is a horizontal line in this graph it also represents demand and price. The market price is equal to marginal revenue, represented by the horizontal MR curve. The dotted line extending left from the intersection of MR and MC denotes the market price on the y-axis.

Step 3: Identify ATC at the profit-maximizing output

From the intersection of MC and MR (profit-maximizing output), draw a line vertically up to where it intersects the ATC curve. This point on the ATC curve is the ATC at the profit-maximizing output. A dotted line from this intersection leads left to the y-axis to show the cost on the price/cost axis.