FRQ 2
Anthony's firm produces wrestling sweatpants in a perfectly competitive market. The table below shows Anthony's total variable cost. He has a fixed cost of $240, and the price per pair of sweatpants is $60 (seriously tho, $60 ? ? 1 {m} all for spirit wear and stuff, but let's be reasonable) Quantity 6 7 8 9 10 Total variable Cost $120 $145 $165 $220 $290 $390 a. Calculate the average total cost of producing 6 and then 9 sweatpants, respectively. Show your work.
b. Calculate the marginal cost of producing the tenth pair of sweatpants. $70
c. What is Anthony's profit-maximizing quantity? Use marginal analysis to explain your answer.
d. At the profit-maximizing quantity you determined in part (c), calculate Anthony's profit or loss. Show your work.
e. Anthony also produces hoodies at a loss in a perfectly competitive market. Draw a correctly labeled graph for Anthony's firm showing the following at a market price of $200.
i. Anthony's profit-maximizing quantity of hoodies
ii. Anthony's loss, completely shaded