JL Groomers Dog-Grooming Business Economics Analysis
What are the cost curves of JL Groomers dog-grooming business?
A. Marginal cost (MC) curve
B. Average variable cost (AVC) curve
C. Average total cost (ATC) curve
Where does the MC curve cross the AVC curve?
A. $14
B. $22
C. $0
What market price will result in zero economic profits for JL Groomers?
A. $14
B. $22
C. $0
Cost Curves of JL Groomers Dog-Grooming Business
The cost curves of JL Groomers dog-grooming business include the Marginal Cost (MC) curve, Average Variable Cost (AVC) curve, and Average Total Cost (ATC) curve.
Where MC curve crosses AVC curve
The MC curve crosses the AVC curve at $14.
Market price for zero economic profits
JL Groomers will make zero economic profits when the market price for their dog-grooming service is equal to their Average Total Cost (ATC), which is $22.
Cost Curves of JL Groomers Dog-Grooming Business: JL Groomers experiences normal cost curves, with the MC curve crossing AVC at $14 and ATC at $22. These cost curves are essential in determining the profitability of the business.
Market Price and Economic Profits: When the market price equals the ATC, a firm will make zero economic profits. In the case of JL Groomers, their ATC is $22, indicating that they will break even when selling their dog-grooming service at that price.
Why Market Price Matters: Understanding cost curves and their relationship to market prices is crucial for businesses like JL Groomers. It helps them determine the pricing strategies that will lead to profitability and sustainability in the competitive market.