Problem
1. A manufacturer of vacuum cleaners incurs a constant variable cost of production equal to $80. She can sell the appliances to a wholesaler for $130. Her annual fixed costs are $200,000. How many vacuums must she sell in order to cover her total costs?
2. For the vacuum cleaner producer in the preceding question:
(a) Draw the MC curve.
(b) Next, draw her AFC and her AVC curves.
(c) Finally, draw her ATC curve.
(d) In order for this cost structure to be compatible with a perfectly competitive industry, what must happen to her MC curve at some output level?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.