Answer the following questions using the cost curves for the price-taking firm shown in the figure below.
If price is $3 per unit of output, draw the marginal revenue curve. The manager should produce _____________ units.
Since average total cost is $________ for this output, total cost is $___________.
The firm makes a profit of $_____________.
Let price fall to $1, and draw the new marginal revenue curve. The manager should now produce ________ units.
At a price of $1, total revenue is now $_____________ and total cost is $____________. The firm makes a loss of $_____________.
At a price of $1, total variable cost is $_____________, leaving $_____________ to apply to fixed cost.
If price falls below $_____________, the firm will produce zero output.