An automobile repair shop charges the competitive market price of $16 per bike repaired. The firm's short-run total cost is given by STC(Q) = Q³/3. Son 3. Draw the shop's total revenue and total cost curves, and graph the total profit on the same diagram. Using your graph, label the point of profit-maximizing quantity and its profit level. 4. Suppose now the new price is P'. What is the profit-maximizing quantity as a function of P'. If the price increases by a factor of four (i.e. price: 4P'), how much does the profit-maximizing quantity increase?
Q: Price 10000 5000 500 1000 Quantity 1500 2000 Demand Curve 1 Demand Curve 2 O Demand is relatively…
A: Elasticity of demand is a measure of the responsiveness or sensitivity of the quantity demanded of a…
Q: Compare graphically the behaviour of the current Average Productivity of Labour and Employment in…
A: In analyzing the behavior of the current Average Productivity of Labor (APL) and employment in the…
Q: AS₁ AS₂ 1*1* AD Price level AS AD Real domestic output Real domestic output (A) (B) AD₂ AD₁ AS₂…
A: Aggregate demand is the sum of consumption, investment, government spending and net export. The…
Q: How does the graph look for the effect of a temporary but persistent increase in total factor…
A: The concept of total factor productivity refers to how successfully and efficiently inputs are…
Q: .) the value of the first hectare of this park is equal to .) the socially-efficient size of this…
A: Socially optimal efficiency refers to a state in which resources are allocated in a way that…
Q: There are two shows on Netflix that Jeff can watch, Show 1 and Show 2. Where x₁ measures the number…
A: Indifference curve:- An indifference curve can be explained as graph that shows a group of…
Q: How do u draw the coordination failure model following a temporary increase in current total factor…
A: Total factor productivity (TFP) is a measure of the overall efficiency and effectiveness with which…
Q: The avocado growing industry in Chile is perfectly competitive, and each producer has a long-run…
A: In perfect competition, There exists a large number of buyers and sellers. The firm will produce…
Q: What best characterizes the relationship between wage labor and capital? a) Capital produces wage…
A: In capitalist economies, wage exertions refers to the association where individuals sell their labor…
Q: 5. Problems and Applications Q5 Edison owns a water pump. Because pumping large amounts of water is…
A: A supply schedule is a table showing the quantity supplied of a commodity at each price for a given…
Q: Use the graph above to answer the following questions: Show your work. 5. What is consumer surplus…
A: Consumer surplus measures the benefit that consumers receive from purchasing a good at a price lower…
Q: Let Q=500-P and Q=4P Suppose the government levies a tax d O a. 32,121 O b. 19,000,001 O c. 73,728 O…
A: The consumer surplus refers to the difference between the maximum price a consumer is willing to pay…
Q: Consider product Y with industry supply given by p = 40 + q and industry demand given by p = 20 -…
A: Demand curve is the downward sloping curve. Supply curve is the upward sloping curve. Equilibrium…
Q: The avocado growing industry in Chile is perfectly competitive, and each producer has a long-run…
A: In perfect competition, There exists a large number of buyers and sellers. The firm will produce…
Q: For each of the following scenarios, begin by assuming that all demand factors are set to their…
A: Demand refers to the quantity of a particular good or service that consumers are willing and able to…
Q: 5. When was the Solow growth model developed and what was significant about that period? What did it…
A: The Solow growth model, otherwise called the neoclassical growth model, was developed by Robert…
Q: If the number of unemployed equals 240,000 and the number of employed equals 300,000, the…
A: The labor force participation rate is a measure that represents the proportion of the working-age…
Q: a) Chika has calculated the marginal utility that she derives from her paid employment and from…
A: Chika will assign each extra hour to the activity that provides a greater marginal utility. Marginal…
Q: Questions for Further Discussion 1. It would seem that neighbors could easily negotiate among…
A: Local governments create local laws as statutory instruments to control a wide range of matters in…
Q: Create a brief report on globalization in the textile industries You are looking for the main…
A: Globalization has had a significant impact on the textile industry, shaping its global integration…
Q: 58 Instructions: Enter your responses as a whole number. a. Identify the line that depicts total…
A: Total Income = Wages + Benefits 62 - 64 year old person is eligible for 15000 Social Benefit . Wage…
Q: A single firm is the only employer in a labour market. The marginal revenue product, labour supply,…
A: As it is mentioned that there is a single firm acting as employer that is demanding labor, therefore…
Q: Assume that the information technology and consulting industries employ people with similar skills.…
A: The labor market refers to the supply of and demand for labor, in which employees provide the supply…
Q: 3. Illustrate graphically two different types of market failure. Draw the quantity of the good that…
A: Market failure refers to the situation when the market fails to function properly causing a…
Q: ou are looking for a new apartment in Manhattan. Your income is $4,000 per month, and you know that…
A: The budget constraint is the locus of all affordable consumption bundles at the given income of the…
Q: Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is…
A: The required reserve ratio of a bank depicts the minimum amount of deposits a bank must keep as…
Q: Assuming a Cobb-Douglas production function with constant returns to scale, then, as L rises with K…
A: The Cobb-Douglas production function is an economic model that represents the relationship between…
Q: A carton packaging manufacturer considers 2 alternative machines in its production process, namely…
A: The price of the automatic machine is Rp. 23 billion with an estimated salvage value of Rp. 4M after…
Q: Identify the relevant economic concept which can be matched to the descriptions below. Simple give…
A: A market is a place or a system where buyers and sellers interact to exchange goods, services, or…
Q: ge from 0 to D1. ge from 0 to D2. me from 0 to D3
A: A budget deficit occurs when a government's expenditures exceed its revenues in a given period.…
Q: When capital increases by AK units, output increases by Choose the correct one. Ο ΔΝ units Ο MPN ×…
A: Capital refers to the financial resources, assets, or wealth that individuals, businesses, or…
Q: The value of an investment comes from its cash flows. Let's say you are intent on receiving $45,000…
A: Receiving at end of year 1=$45,000(Continue till 10 years) Lump sum amount=$380,000(Invested in year…
Q: The diagram below depicts various possible indifference curves. Based on this diagram, which of the…
A: The utility function refers to all those commodity bundles that derive the same amount of utility…
Q: What is real GDP per capita if a country's real GDP is $6.98 trillion and that country's population…
A: GDP per capita is the ratio of total Gross domestic product and total population .
Q: You have $43,000 to invest in the stock market and have sought the expertise of Adam, an experienced…
A: When there are multiple compounding periods throughout a year, the effective annual interest rate…
Q: Consider a small open economy with no perfect capital mobility and fixed exchange rate regime. If…
A: In a small open economy with no perfect capital mobility and a fixed exchange rate regime, the…
Q: we calculated the gains and losses from price controls on natural gas and found that there was a…
A: Demand refers to the quantity of a product or service that consumers are willing and able to…
Q: Impact of a QR Answered Due on May 18, 11:59 PM A Quantitative Restriction has been imposed on this…
A: Permits refer to official documents or licenses issued by a governing authority that grant…
Q: 9. Problems and Applications Q9 Purchasing-power parity holds between the nations of Ectenia and…
A: An exchange rate is the value of one currency in relation to another currency. It is the rate at…
Q: general, what explains the shape of the Laffer curve?
A: Optimal tax refers to the concept of determining the ideal level of taxation that maximizes social…
Q: Given this data, we would expect the quality of life to have increased by what percentage over the…
A: The standard of living is defined as the average quality or quantity of goods and service that the…
Q: Suppose that the market for sports watches is a competitive market. The following graph shows the…
A: In a competitive market, there are large number of firms selling identical products. Firm's ATC is…
Q: Based on 'willingness to sell, plot is supply curve as a step function on the following graph using…
A: Using the given information’s, we can construct the table for supply schedule as follows. Price…
Q: A firm learns of an investment opportunity that will increase future revenue, two years from now, by…
A: To determine whether the firm should make this investment, we need to calculate the present value of…
Q: In the diagram D₁ and S₁ are the initial supply and demand curves of the pound sterling (£) on the…
A: Currencies function as a vital component in commerce around the world due to the fact that it makes…
Q: 28. What was the biggest mistake made by banks leading up to the Great Recession? They only issued…
A: A recession refers to a significant and widespread decline in economic activity within a country or…
Q: 1. The price of a scoop of chocolate ice cream (x) is $2 and price of a scoop of vanilla ice cream…
A: Optimal consumption bundle: The optimal consumption bundle is such that at that bundle the…
Q: Consider a small open economy with no perfect capital mobility whose Central Bank is explicitly…
A: Governments have to strike an equilibrium between opposing economic goals. For instance, fostering…
Q: Robert Fogel is an economic historian best known for work suggesting that a significant factor in…
A: The growth of economy in long run refers to a sustained and continuous increase in an economy's…
Q: For each of the following scenarios, begin by assuming that all demand factors are set to their…
A: Income elasticity of demand: It is the measurement of the change in the quantity demanded of a…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
- Joyce owns a gas station and monopolizes gas sales along a remote stretch of road. In February, Joyce stayed open even though she earned negative economic profits. Draw a correctly labeled graph for Joyce’s gas station during February and show each of the following. The profit-maximizing output and price, labeled QJ and PJ The average total cost curve, labeled ATC Deadweight loss, completely shaded What must have been true for Joyce to continue operating during the month of February even though she earned negative economic profit? Assume that fixed costs for Joyce’s gas station decrease. Would Joyce’s profit-maximizing quantity increase, decrease, or stay the same in February? Explain. During the month of July, demand increases so that Joyce now earns a positive economic profit. However, she realizes her profits would have been higher if she had reduced the price of gasoline. At the quantity sold in July, was marginal revenue greater than, equal to, or less than…Exercise-Universal Shampoo is a price taker firm. Its costs are: Output (Shampoo per hour) Total Cost ($ per hour) 0 10 1 21 2 30 3 41 4 54 5 69 a. Calculate Universal’s profit-maximizing output and economic profit if the market price is (i) $14 a shampoo. (ii) $12 a shampoo (iii) $10 a shampoo b. What is Universal’s shutdown point and its economic profit if it shuts down temporarily? c. At what price will firms with costs identical to Universal’s exit the Shampoo market in the long run? id. At what price will firms with costs identical to Universal’s enter the Shampoo market in the long run?The Zinger Company manufactures and sells a line of sewing machines. Demand per period (Q) for a particular model is given by the following relationship:Q = 400 − .5Pwhere P is price. Total costs (including a "normal" return to the owners) of producing Q units per period are:TC = 20,000 + 50Q (a) Express total profits (π) in terms of Q. (b) At what level of output are total profits maximized? What price will be charged? What are total profits at this output level? (c) What model of market pricing has been assumed in this problem? Justify your answer.
- The table attached shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. Please answer all questions below: Fill in the values for total revenue (TR), total cost (TC) and marginal cost (MC) in the column provided. Determine the profit maximizing output. Show the equilibrium of the firm in a diagram. If the average revenue falls to RM3 per unit, calculate the firm’s new profit or loss at the equilibrium. Based on your answer in part (d), should the firm continue or stop the production? Justify.The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. If the average revenue falls to RM3 per unit, calculate the firm’s new profit or loss at the equilibrium. Based on your answer, should the firm continue or stop the production? Justify. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5 7 6.0Your business, which has some market power, has the following demand (D), marginal revenue (MR), marginal cost (MC), and average cost (AC) curves. Move point E to label the profit-maximizing price and quantity for your firm. If the goal of your business is to maximize profit, how much will it produce, and what price will it charge? -The business will exit the market because it is unable to cover its average costs. -The business will produce 40 units, and charge a price of $5. -The business will produce 30 units, and charge a price of $3. -The business will produce 30 units, and charge a price of $6.
- Silk wood Enterprise specializes in gardening supplies.The demand for it new brand of fertilizer fertilizer,Meadows Muffins, is given by the equation Q=120-4p. a. Silk wood is currently charging $10 for a pound of Meadows Muffins.At this price , what is the price elasticity of demand for Meadow Muffins? b. At a price of 10$ ,what is silk wood marginal revenue? c. What price should silk wood should charge if it wishes to maximize its total revenue? d. At the total revenue maximizing price, what is the price elasticity of demand for Meadows Muffins?Refer to Figure 1 for questions 18-20. In Figure 1: D = Demand Curve; MR = Marginal Revenue Curve; and MC = LRATC is Marginal Cost, assumed to be equal to Long Run Average Total Cost. What is the competitive output and price for this market? Options: a) P = $3, Q = 7 b) P = $6, Q = 4 c) P = $3, Q = 4 d) P = $6, Q = 7A typical profit-maximizing firm in a perfectly competitive constant-cost industry is earning a positive economic profit.(a) Is the market price greater than, less than, or equal to the firm's price? Explain.(b) Draw correctly labeled side-by-side graphs for both the market and a typical firm and show each of the Following(i) Market price and quantity, labeled Pm and Qm.(ii) The firm's quantity, labeled Qf(iii) The firm's average revenue curve, labeled AR(iv) The firm's average total cost curve, labeled ATC(v) The area representing total cost, shaded completely(c) If one firm in the market were to raise its price, what will happen to its total revenue? Explain.(d) Now suppose the market is in long-run equilibrium. The government gives a lump-sum subsidy to each firmproducing in the industry. Indicate whether each of the following will increase, decrease, or remain the same.(i)The firm's quantity in the short run. Explain.(ii) The market price and quantity in the long run. Explain.
- The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. Please answer all questions below: a) Fill in the values for total revenue (TR), total cost (TC) and marginal cost (MC) in the column provided. b) Determine the profit maximizing output. c) Show the equilibrium of the firm in a diagram. d) If the average revenue falls to RM3 per unit, calculate the firm’s new profit or loss at the equilibrium. e) Based on your answer in part (d), should the firm continue or stop the production? Justify. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5…Suppose the firm faces a demand curve for its product P=32-2Q, and the firm's costs of production and marketing are C(Q)=2Q^2. Find the following; a. The formula for profit piein terms of Q b. The first order condition(FOC) and the second order condition(SOC) for maximum total revenue c. The price and quantity that maximizes total revenue, and the corresponding value of the total revenue. d.The FOC and SOC for maximum profit e. The price and quantity that maximize profit and the corresponding value of profit. f. What would the competitive price and quantity be, assuming C(Q)=2Q^2 represented the industry cost functionComplete the following table and identify the profit maximising and output. b. What is true about marginal revenue and marginal costs when profit is maximized. c. What would be the profit-maximizing level of output if price fell to $9?