Poinsettia growing is a perfectly competitive industry and all growers have the same costs. The market price of poinsettias is $16 a pot and each grower maximizes profit by producing 600 pots a week. Average total cost of producing poinsettias is $13 a pot and average variable cost is $9 a pot. Minimum average variable cost is $5 a pot. Calculate each grower's economic profit or loss in the short run.

Poinsettia growing is a perfectly competitive industry and all growers have the same costs. The market price of poinsettias is $16 a pot and each grower maximizes profit by producing 600 pots a week. Average total cost of producing poinsettias is $13 a pot and average variable cost is $9 a pot. Minimum average variable cost is $5 a pot. Calculate each grower's economic profit or loss in the short run.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.7IP

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