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- Using the data in the table below, how much profit will be obtained for producing 7 units of output? Q P TC TR MR MC Profit 0 $5 $9 1 $5 $10 2 $5 $12 3 $5 $15 4 $5 $19 5 $5 $24 6 $5 $30 7 $5 $45 Question 50 options: a) -$5.00 b) $40.00 c) $0 d) -$10.00The accompanying table presents the expected cost and revenuedata for the Tucker Tomato Farm. The Tuckers produce tomatoesin a greenhouse and sell them wholesale in a price-taker market.a. Fill in the firm’s marginal cost, average variable cost,average total cost, and profit schedules.b. If the Tuckers are profit maximizers, how many tomatoesshould they produce when the market price is $500 perton? Indicate their profits.c. Indicate the firm’s output level and maximum profit if themarket price of tomatoes increases to $550 per ton.d. How many units would the Tucker Tomato Farm produce ifthe price of tomatoes fell to $450 per ton? What would bethe firm’s profits? Should the firm stay in business? Explain.1. Assume the market for coffee mugs is perfectly competitive. Firms in themarket are producing output, but are currently making economic losses. a. How does the price of coffee mugs compare to the average total cost, the averagevariable cost, and the marginal cost of producing coffee mugs?b. Draw two graphs, side by side, illustrating the present situation for the typical firm andin the market.c. Assuming there is no change in either market demand or the firms’ cost curves,explain what will happen in the long run to the price of coffee mugs, marginal cost,average total cost, the quantity supplied by each firm, and the total quantity supplied tothe market.
- Given the data provided in the table below, what is the marginal cost of producing the 4th unit of output? Q P TC TR MR MC Profit 0 $5 $9 1 $5 $10 2 $5 $12 3 $5 $15 4 $5 $19 5 $5 $24 6 $5 $30 7 $5 $45 Question 12 options: a) $4.00 b) $19.00 c) $4.75 d) $5.0015) If the average cost (AC) of producing a good is increasing as a firm produces moreoutput (q), then which of the following must be TRUE?A) AFC is falling; AVC is rising; MC > AVCB) AFC is falling; AVC is falling; MC > AVCC) AFC is rising; AVC is rising; MC > AVCD) AFC is rising; AVC is rising; MC < AVCE) AFC is falling; AVC is falling; MC < AVCQuestion 3 The current market price in a competitive industry is $15. Every firm in the industry operates a technology that implies costs described by the function C = 12.5 + 0.3Q2. In the future, the technology is expected to change, and the new cost function will then be C = 10 + 0.2Q2. How much profit is the typical firm making today and in the long run? O. Profit is zero both today and in the long run. O. Profit is 125 both today and in the long run. O. Profit is 175 today and zero in the long run. O. Profit is 250 today and 125 in the long run.
- 4. Suppose we have another firm known as Sepanyan Corporation which makes a product known as Yeghias. Suppose the firm’s FC=$8,000 and its TC=$10,000 and its AVC=$5. What is the ATC? a) $25.00 b) $67.50 c) $100.25 d) $200 e) Not enough information 5. Which of the following is true concerning a competitive firm? a) It will produce even when its economic profit is zero b) It prefers not to maximize profits c)t is the only firm in the market d) Its quantity choice will affect the market price e) People’s PED for the firm’s specific product is inelasticConsider the following production and cost functionsq=〖(10K^(2/5)+5L^(2/5))〗^(5/2)1250=20K+8LWhich implies〖MP〗_K=10〖(10K^(2/5)+5L^(2/5))〗^(3/2) K^(-3/5)〖MP〗_L=5〖(10K^(2/5)+5L^(2/5))〗^(3/2) L^(-3/5)What is the profit maximizing combination of K and L?4. Assess which of the following is true and which is false.A firm’s profit equation is given by π = -100 + 160Q – 20Q2. Therefore,a) The firm’s fixed cost is 100.b) The firm’s fixed cost is 40 and variable cost is 20.c) Marginal profit is Mπ = 160 – 20Q.d) The firm’s profit-maximizing output is Q = 4.e) Marginal profit is Mπ = 160 – 40Q and it is positive for quantities that are lower than theprofit-maximizing quantity.
- Sleek Sneakers Co. is one of many firms in the marketfor shoes.a. Assume that Sleek is currently earning short-runeconomic profit. On a correctly labeled diagram,show Sleek’s profit-maximizing output and price,as well as the area representing profit.b. What happens to Sleek’s price, output, and profitin the long run? Explain this change in words, andshow it on a new diagram.c. Suppose that over time consumers become morefocused on stylistic differences among shoe brands.How would this change in attitudes affect eachfirm’s price elasticity of demand? In the long run,how will this change in demand affect Sleek’s price,output, and profit?d. At the profit-maximizing price you identified inpart (c), is Sleek’s demand curve elastic or inelastic?ExplainThe table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Quantity of Ear Buds MC ($) ATC ($) 10 - 5.00 15 2.00 4.00 20 2.44 3.61 25 3.56 3.60 30 4.02 3.67 35 5.49 3.93 40 5.93 4.18 45 8.59 4.67 Instructions: In part a, enter your answer as the closest given whole number. In parts b–d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? _ pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? $ _ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? $ _ d. Now assume the market price is $5.50 per…Figure 7.7. What is the marginal gainin output from increasing the number of barbers from4 to 5 and from 5 to 6? Does it continue the pattern ofdiminishing marginal returns?
