Assume that the cost data in the following table are for a purely competitive producer: Total Marginal Average Fixed Cost Average Variable Cost Average Total Cost Product Cost $ 60.00 $ 45.00 $ 105.00 $ 45 30.00 42.50 72.50 40 3 20.00 40.00 60.00 35 4 15.00 37.50 52.50 30 12.00 37.00 49.00 35 6. 10.00 37.50 47.50 40 8.57 38.57 47.14 45 8 7.50 40.63 48.13 55 6.67 43.33 50.00 65 10 6.00 46.50 52.50 75 Instructions: Enter your answers rounded to two decimal places. Select "Not applicable" and enter "O" for output if the fi produce. a. At a product price of $56 (i) Will this firm produce in the short run? (Click to select) ♥ (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? |(Click to select) output = | units per firm (iii) What economic profit or loss will the firm realize per unit of output? (Click to select) v per unit = $ b. At a product price of $41 (i) Will this firm produce in the short run? (Click to select) ▼ (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output?

Assume that the cost data in the following table are for a purely competitive producer: Total Marginal Average Fixed Cost Average Variable Cost Average Total Cost Product Cost $ 60.00 $ 45.00 $ 105.00 $ 45 30.00 42.50 72.50 40 3 20.00 40.00 60.00 35 4 15.00 37.50 52.50 30 12.00 37.00 49.00 35 6. 10.00 37.50 47.50 40 8.57 38.57 47.14 45 8 7.50 40.63 48.13 55 6.67 43.33 50.00 65 10 6.00 46.50 52.50 75 Instructions: Enter your answers rounded to two decimal places. Select "Not applicable" and enter "O" for output if the fi produce. a. At a product price of $56 (i) Will this firm produce in the short run? (Click to select) ♥ (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? |(Click to select) output = | units per firm (iii) What economic profit or loss will the firm realize per unit of output? (Click to select) v per unit = $ b. At a product price of $41 (i) Will this firm produce in the short run? (Click to select) ▼ (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output?

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

See similar textbooks

Similar questions

The market for apple pies in the city of Ectenia is competitive and has the followingdemand schedule:Price Quantity Demanded$ 1 1,200 pies2 1,1003 1,0004 9005 8006 7007 6008 5009 40010 30011 20012 10013 0 ch producer in the market has fixed costs of $9 and the following marginal cost:Quantity Marginal Cost1 pie $ 22 43 64 85 106 12a. Compute each producer’s total cost and average total cost for 1 to 6 pies.b. The price of a pie is now $11. How many pies are sold? How many pies does eachproducer make? How many producers are there? How much profit does eachproducer earn?c. Is the situation described in part (b) a long-run equilibrium? Why or why not?d. Suppose that in the long run there is free entry and exit. How much profit does eachproducer earn in the long-run equilibrium? What is the market price? How many piesdoes each producer make? How many pies are sold in the market? How many pieproducers are operating?
A firm has a linear demand function for its product. When the price of the product isSh.220, the quantity demanded is 40 units. When the price increases to Sh.240, thequantity demanded becomes 30 units. In addition, the firm’s marginal cost function isgiven by:MC = 40q – 2q2 + 2Fixed cost = Sh.5 millionWhere q = quantity demanded, MC = marginal cost (Sh. million)Evaluate the level of output that maximizes profits.
A textile firm in a competitive industry employs a particularly efficient manager torun the operations at its production facility. In the textile industry, a plant managertypically makes a salary of $4,500 per month. The textile firm employing thesuperior manager faces the LAC and LMC curves shown in the figure below. Inlong-run competitive equilibrium, the price of the product is $9 A- typical textile firm in this competitive industry has a minimum long-runaverage cost of $______. The typical textile firm earns economic profit of$______ B-The textile firm with the superior plant manager could earn economic profitof $___________ per month, if no rent is paid to the superior manager C-The superior plant manager is likely to earn a salary of $______ per month,$____________ of which is economic rent
Assume the following cost data are for a purely competitive producer Total Product AFC AVC ATC MC 0 1 $60 $45 $105 $45 2 $30 $42.50 $72.50 $40 3 $20 $40 $60 $35 4 $15 $37.50 $52.50 $30 5 $12 $37 $49 $35 6 $10 $37.50 $47.50 $40 7 $8.57 $38.57 $47.14 $45 8 $7.50 $40.63 $48.13 $55 9 $6.67 $43.33 $50 $65 10 $6.00 $46.50 $52.50 $75 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) 1 2 3 4 Price Quantity supplied, single firm Profit (+) or loss (-) Quantity supplied, 1500 firms $26 $32 $38 $41 $46 $56 $66
Explain why earning zero economic profit is not as bad as itsounds.
Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MCMC), average total cost (ATCATC), and average variable cost (AVCAVC) curves shown on the following graph. The following diagram shows the market demand for steel. Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of steel would be per ton. At that price, firms in this…
Complete the Daily Production Cost Schedule table below. Quantity MR = Price per Unit TFC TVC AFC AVC TC ATC MC 0 $ 325.00 $ 100.00 1 $ 325.00 $ 100.00 $ 400.00 2 $ 325.00 $ 100.00 $ 600.00 3 $ 325.00 $ 100.00 $ 750.00 4 $ 325.00 $ 100.00 $ 950.00 5 $ 325.00 $ 100.00 $ 1,200.00 6 $ 325.00 $ 100.00 $ 1,525.00 7 $ 325.00 $ 100.00 $ 1,950.00 Abbreviations: MR: Marginal revenue TFC: Total fixed cost TVC: Total variable cost AFC: Average fixed cost AVC: Average variable cost TC: Total cost ATC: Average total cost MC: Marginal cost
depict a ATC curve, one where the firm has negative profits(π < 0) at the profit maximizing output of 1000. Add an additional average cost curve that will allow you to determinewhether to shutdown or keep producing at Q = 1000.
A bakery operating in competitive markets sells itsoutput for $20 per cake and rents ovens at $30 perhour. To maximize profit, it should rent ovens untilthe marginal product of an oven isa. 2/3 cake per hour.b. 3/2 cakes per hour.c. 10 cakes per hour.d. 25 cakes per hour.
Suppose that each firm in a competitive pizza market has the following identical cost: Total cost: TC=25+1.5Q2i. Formulate the equation or level of fixed cost, variable cost, marginal cost, average variable cost (AVC) and average total cost (ATC) for each firm.ii. Sketch a diagram to illustrate average total cost (ATC) and marginal cost (MC) for Q from 1 to 20. Identify the quantity at which the average total cost (ATC) reaches its minimum and interpret its economic or business implication.iii. An innovation was diffused widely among all firms in the market. Adoption of this innovation will help to reduce 20% of the variable cost for any given level of production while all other factors remain the same. A firm needs to pay a fee of $5 to adopt the innovation. Formulate the new production cost functions (TC, TFC, TVC, ATC and MC) for each firm.(Suggested word count: 300-350 words)
Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). InformationPrice: $4Elasticity of demand at price of $4 is Ed=-1Quantity of output: 2000Total variable cost: 4000Average fixed cost: 1Marginal cost is constant and equal to the average variable cost: MC=ACV=2. Which of the following answers correctly describes this case? a) The firm is maximizing profits at the current price of $4.b) The firm should increase price and reduce quantity produced.c) None of the other answersd) Firm should reduce price and increase quantity produced.
Assume the following cost data are for a purely competitive producer Total Product AFC AVC ATC MC 0 1 $60 $45 $105 $45 2 $30 $42.50 $72.50 $40 3 $20 $40 $60 $35 4 $15 $37.50 $52.50 $30 5 $12 $37 $49 $35 6 $10 $37.50 $47.50 $40 7 $8.57 $38.57 $47.14 $45 8 $7.50 $40.63 $48.13 $55 9 $6.67 $43.33 $50 $65 10 $6.00 $46.50 $52.50 $75 At a price product of $56, will this firm produce in the short run? Why or Why not? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Explain. What economic profit or loss will the firm realize per unit of output?