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Fig. 1 The Demand Curve Facing the Firm

Price per Bed. $600. 450. 200. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Number of Bed Frames per Day. Fig. 1 The Demand Curve Facing the Firm. Total Revenue = $600 X 2 = $1,200. Total Revenue = $450 X 5 = $2,250. Demand Curve Facing Ned's Beds. Dollars. $3,500. 3,000. 2,500. 2,000.

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Fig. 1 The Demand Curve Facing the Firm

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  1. Price per Bed $600 450 200 1 2 3 4 5 6 7 8 9 10 Number of Bed Frames per Day Fig. 1 The Demand Curve Facing the Firm Total Revenue = $600 X 2 = $1,200. Total Revenue = $450 X 5 = $2,250. Demand Curve Facing Ned's Beds

  2. Dollars $3,500 3,000 2,500 2,000 1,500 1,000 500 0 1 1 2 3 4 5 6 7 8 9 10 Output Fig. 2a Profit Maximization TC Profit at 7 Units Profit at 5 Units Profit at 3 Units TR DTR from producing 2nd unit DTR from producing 1st unit Total Fixed Cost

  3. Dollars 600 500 400 300 200 100 0 Output 7 1 2 3 4 5 6 8 –100 –200 Fig. 2b Profit Maximization MC profit rises profit falls MR

  4. Dollars Output Fig. 3 Two Points of Intersection MC A B MR Q1 Q*

  5. Dollars TFC Output Q* Fig. 4a Loss Minimization

  6. Dollars Output Fig. 4b Loss Minimization MC Q* MR

  7. Dollars Output Fig. 5 Shut Down TC TVC Loss at Q* TFC TR TFC Q*

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