Mr. Toad's Stools + My complete confusion with cost curves. Help in the MicroEcon question please?

Question

Below is the link to the corresponding cost curves for "Mr. Toad's Stools", a firm making footstools. The firm can sell all the stools it wants at a price of P1.

http://i3.photobucket.com/albums/y65/jonjaggers/555.jpg

B) Does Mr. Toad’s production process follow the Law of Diminishing Returns? How do you know?

C) If the market price decreased to P2 (refer to link), how would Mr. Toad's marginal cost curve change? How would output change?

D) D) When the Price is P1, Mr. Toad chooses to produce quantity Q1, saying, “I prefer to produce where my average costs are lowest.” Mr. Toad could increase his profit by making more stools. Explain how Mr. Toad’s profit increases even though average costs also increase at the same time.

Here are my answers:

http://blog.myspace.com/index.cfm?fuseaction=blog.view&friendID=114721160&blogID=243973224&MyToken=e8f24a98-76cb-44fc-9d73-a7103ebc56c6

Thanks for the help!

Answer 1

OK. I've never seen such a weird MC schedule. If this is a short run analysis (fixed plant constraint) as you imply, then Mr. Toad will live in the world of diminishing returns, plain and simple. With AVC having a U-shape to it, then even with a crazy MC schedule, the law of diminishing returns is kicking in.
Price does not change costs of production. So, a decrease in price to P2 won't shift the MC schedule, you will just balance out at a different location on the given MC curve, produce output level Q1 and suffer a loss (but minimal compared to shutting down and losing all your fixed costs).
When price rises to P1, if Mr. Toad is stupid enough to cling to output level Q1 he will not be maximizing his profit. By considering additional units of output he will get closer to balancing his margins (MR=MC) and making more profit. He is too busy concentrating on max profit per unit vs. max profit overall, there is a difference.

Answer 2

nicely, yeah, my first homestead in manhattan the back backyard became lake erie and my 2nd homestead had a lot of relatively small tree toads (cos there became a woodland interior the back) and then a number of those massive toads and that they might bounce onto them. The small tree toads have been cameleons or chameleons or besides the fact that those animals are suggested as that could replace shade to the ambience they're in. those extremely small tree toads (small like a pencil eraser) ought to turn gray in the event that they have been on gray bark or green in the event that they have been on a green leaf-merely existence a good form of lizards do. especially cool. howdy, you weren't speaking regarding the form of stool i think of u might advise have been u? (a toad's poop) yeah, i've got considered that too cos held a team of them and that they pooped in my hand.

Answer 3

bear