Authors libby rittenberg 487

equals marginal revenue These curves (labeled MC and MR2) intersect in Panel (b) at an output of 4,444 pounds of radishes per month Figure 9.8 Suffering Economic Losses in the Short Run Tony Gortari experiences a loss when price drops below ATC, as it does in Panel (b) as a result of a reduction in demand If price is above AVC, however, he can minimize his losses by producing where MC equals MR2 Here, that occurs at an output of 4,444 pounds of radishes per month The price is $0.18 per pound, and average total cost is $0.23 per pound He loses $0.05 per pound, or $222.20 per month When producing 4,444 pounds of radishes per month, Mr Gortari faces an average total cost of $0.23 per pound At a price of $0.18 per pound, he loses a nickel on each pound produced Total economic losses at an output of 4,444 pounds per month are thus $222.20 per month (=4,444×$0.05) No producer likes a loss (that is, negative economic profit), but the loss solution shown in Figure 9.8 "Suffering Economic Losses in the Short Run" is the best Mr Gortari can attain Any level of production other than Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 487