7. Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex's product sells for $200 per unit. Quantity (units) 2 3 4 9 10 1 5 6 7 8 Total Variable Cost (TVC) 180 220 300 390 100 500 640 800 1000 1250 Answer the following questions: a. What is the profit-maximizing level of output? Calculate Apex's profit. b. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex's profit (or loss) in this case?

7. Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex's product sells for $200 per unit. Quantity (units) 2 3 4 9 10 1 5 6 7 8 Total Variable Cost (TVC) 180 220 300 390 100 500 640 800 1000 1250 Answer the following questions: a. What is the profit-maximizing level of output? Calculate Apex's profit. b. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex's profit (or loss) in this case?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 41P: A computer company produces affordable, easy-to-use home computer systems and has fixed costs of...

See similar textbooks

Similar questions

What is a price taker firm?
What two lines on a cost curve diagram intersect at the shutdown point?
Would independent trucking fit the characteristics of a perfectly competitive industry?
How does the average variable cost curve help a firm know whether it should shut down immediately?
The WipeOut Ski Company manufactures skis for beginners. Fixed costs are 30. Fill in Table 7.16 for total cost, average variable test, average total cost, and marginal cost.
How does a perfectly competitive film calculate total revenue?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
Many films in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.
What two lines on a cost curve diagram intersect at the zero-profit point?
Finding a life partner is a complicated process that may take many years. It is hard to think of this process as being part of a very complex market, with a demand and a supply for partners. Think about how this market works and some of its characteristics, such as search costs. Would you consider it a perfectly competitive market?