C. Given the data below. 1. Draw the corresponding TC curve TC 20 60 40 80 60 100 80 130 100 240 2. For a firm in a perfectly competitive market, the total revenue curve is unusually easy to draw. What will it look like? Draw TR in your figure (along with your TC). Remember that if you sell nothing, your revenue is zero. The price of the good is 2.20. 3. Below the graph, construct another graph with the same scale on the X-axis. First, draw the curve for AVC. How can you know at which quantity AVC reaches its lowest point? Then draw the MC and MR.

C. Given the data below. 1. Draw the corresponding TC curve TC 20 60 40 80 60 100 80 130 100 240 2. For a firm in a perfectly competitive market, the total revenue curve is unusually easy to draw. What will it look like? Draw TR in your figure (along with your TC). Remember that if you sell nothing, your revenue is zero. The price of the good is 2.20. 3. Below the graph, construct another graph with the same scale on the X-axis. First, draw the curve for AVC. How can you know at which quantity AVC reaches its lowest point? Then draw the MC and MR.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 12P

See similar textbooks

Similar questions

A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
What two rules does a perfectly competitive firm apply to determine its profit-maximizing quantity of output?
Since a perfectly competitive firm can sell as much as it wishes at the market price, why can the firm not simply increase its profits by selling an extremely high quantity?
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
Explain how the profit-maximizing rule of setting P=MC leads a perfectly competitive market to be allocatively efficient.
Henry Potter owns the only well in town that produces clean drinking water. He faces the following demand, marginal revenue, and marginal cost curves: Demand: P=60−QP=60−Q Marginal Revenue: MR=60−2QMR=60−2Q Marginal Cost: MC=QMC=Q On the following graph, use the blue line (circle symbol) to graph Mr. Potter's demand curve. Then, use the black line (cross symbol) to graph his marginal revenue (MR) curve. Next, use the orange line (square symbol) to graph his marginal cost (MC) curve. Finally, use the grey point (star symbol) to indicate the profit-maximizing price and quantity. : The profit-maximizing quantity is___units, and the profit-maximizing price is___. Mayor George Bailey, concerned about water consumers, is considering a price ceiling that is 10% below the monopoly price. At this new price, the quantity demanded would be___units. At this quantity, the marginal cost would be___the price. Therefore, the profit-maximizing Mr. Potter___produce…
3. The components of marginal revenueJabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced eight trucks, but then decided to increase production to nine trucks. The following graph gives the demand curve faced by Jabari’s HookNLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $80,000 to $60,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial eight engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $60,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $60,000. 3. The components of marginal revenue Jabari's HookNLadder…
Consider the table of marginal costs of producing t-shirts in a perfectly competitive market below. If the market price is equal to $8, what is the profit maximizing number of t-shirts to produce and sell? Note the second column describes marginal costs. T-shirts Marginal Cost 0 - 1 6 2 3 3 6 4 9 5 11 6 14 Group of answer choices 0 1 2 3 4 5 6
Maggie is one firm of many in the market for toothpaste, which is in long-run equilibrium. 1,a. Draw a diagram showing Maggie’s demand curve, marginal-revenue curve, average total cost curve, and marginal-cost curve. Label Sparkle’s profit-maximizing output and price. b. What is Maggie’s profit? Explain. c. On your diagram, show the consumer surplus derived from the purchase of Maggie toothpaste. Also show the deadweight loss relative to the efficient level of output. d. If the government forced Maggie to produce the efficient level of output, what would happen to the firm? What would happen to Maggie’s customers?
Assume the table below is extracted from Dodi company Ltd a perfectly competitive firm selling cabbages. Assume that when the firm’s selling price is AUD 15, the marginal revenue is also AUD15. Complete the table below and answer the questions that follow. Quantity (Kg) AVC AFC ATC MC 2.50 7.50 5.10 3.50 9.00 3.00 9.00 4.50 10.00 2.50 12.50 5.50 14.00 1.80 13.00 6.00 18.00 1.67 15.00 10.00 25.00 1.43 16.00 Qty = Quantity; AVC=Average variable cost; AFC = Average fixed cost; ATC=Average Total Cost; MC= Marginal Cost; Rev = Revenue; MR= Marginal Revenue; Kg = Kilogram Based on your answers to the table above, identify the profit maximizing quantiy supplied by the firm. Calculate the amount of profit/loss at this optimal point. Show your work.
You are given the following information for Clarke's Cookies which produces in a perfectly competitive market. TFC = $10 Market price = $11 The marginal cost of production appears in the table below: Q P=AR=MR TFC TVC TC MC AVC ATC 1 10 11 2 10 9 3 10 7 4 10 6 5 10 8 6 10 11 7 10 12 8 10 14 9 10 16 a) In the table above find TVC, AVC, ATC, and MR
Assume that apples are produced in a perfectly competitive market. Grande’s Orchard is a typical firm that grows and sells apples. Currently, Grande earns zero economic profit, and the market price of apples is $10 per bushel. (a) Draw a correctly labeled graph showing Grande’s demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled QG . (b) Suppose an increase in the popularity of apple cider increases the demand for apples. How will the increase in the demand for apples affect Grande’s economic profit in the short run? Explain. (c) What will happen to Grande’s economic profit in the long run? Explain.