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2.Assume the following cost data are for a purely competitive producer: see table below: Total Average Average Product Fixed Cost Variable Cost 0 I 2 3 4 5 6 7 8 9 10 $60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 $45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 Average Total Cost $105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 Marginal Cost $45 40 35 30 35 40 45 55 65 75 a. At a product price of $66, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output. b. Answer the questions of 2a assuming product price is $46. Explain in detail. c. Answer the questions of 2a assuming product price is $38. Explain in detail.

2.Assume the following cost data are for a purely competitive producer: see table below: Total Average Average Product Fixed Cost Variable Cost 0 I 2 3 4 5 6 7 8 9 10 $60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 $45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 Average Total Cost $105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 Marginal Cost $45 40 35 30 35 40 45 55 65 75 a. At a product price of $66, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output. b. Answer the questions of 2a assuming product price is $46. Explain in detail. c. Answer the questions of 2a assuming product price is $38. Explain in detail.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter11: The Firm: Production And Costs
Section: Chapter Questions
Problem 3P
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2.Assume the following cost data are for a purely competitive producer: see table below: Total Average Product Fixed Cost I 2 3 4 5 6 7 8 9 10 $60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 Average Variable Cost $45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 Average Marginal Total Cost Cost $105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 $45 40 35 30 35 40 45 55 65 75 a. At a product price of $66, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output. b. Answer the questions of 2a assuming product price is $46. Explain in detail. c. Answer the questions of 2a assuming product price is $38. Explain in detail. d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3) e. Now assume that there are 1,500 identical firms in this competitive industry; that is, there are 1,500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4). f. Suppose the market demand data for the product are as follows: table in textbook (link above) What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?
Transcribed Image Text:2.Assume the following cost data are for a purely competitive producer: see table below: Total Average Product Fixed Cost I 2 3 4 5 6 7 8 9 10 $60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 Average Variable Cost $45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 Average Marginal Total Cost Cost $105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 $45 40 35 30 35 40 45 55 65 75 a. At a product price of $66, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output. b. Answer the questions of 2a assuming product price is $46. Explain in detail. c. Answer the questions of 2a assuming product price is $38. Explain in detail. d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3) e. Now assume that there are 1,500 identical firms in this competitive industry; that is, there are 1,500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4). f. Suppose the market demand data for the product are as follows: table in textbook (link above) What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?
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