Course: ECO 110

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Unit 4 Practice Problem

Unit 4 Practice Problem

Assume that Acme Clothing, the firm introduced in the chapter on production and cost, produces jackets in a perfectly competitive market. Suppose the demand and supply curves for jackets intersect at a price of $81. Now, using the marginal cost and average total cost curves for Acme shown here:

Figure 9.11

Estimate Acme’s profit-maximizing output per day (assume the firm selects a whole number). What are Acme’s economic profits per day?