CARLOS 4. A firm in a purely competitive industry is currently producing 1,500 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $325, and if it produced 500 units per day, its total cost would be $175. a. What are the firm's ATC at these three levels of production? b. If all firms have the same cost structure, what is the highest possible price per unit that could exist as the market price in long-run equilibrium?
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- Would independent trucking fit the characteristics of a perfectly competitive industry?Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?Price (dollars per packet of chips) Quantity demanded (millions of packets of chips per year) Quantity supplied (millions of packets of chips per year) 4 135 26 5 104 53 6 81 81 7 68 98 8 53 110 9 39 121 C: Harry-Chips is a firm in the potato chips industry. Harry-Chips produces 10 million packets of chips per year at an average total cost (ATC) of $4. What is Harry-Chips short-run profit or loss per year? Explain your answer in detail. D: Given your answer in part d, would new firms enter or existing firms exit the market? What would be the long-run impact on Harry-Chips’ profit or loss? Explain in detail.
- Quantity Price Total Fixed Costs Variale Cost Total Costs Average Variable Costs Average Total Cost Marginal Cost Total Revenue Marginal Revenue 0 35 25 0 1 35 25 20 2 35 25 25 3 35 25 35 4 35 25 52 5 35 25 80 If this firm produces a quantity of zero units, what is the total profits? What is the firm's marginal cost at a production level of two units? What is the average variable cost at a production level of five units? This firm becomes profitable producing at a quantity of ___ units. The average total cost is smallest at which level of production? At what quantity should this firm produce to maximize their profits based on your calculations? The total costs to produce four units is __________ while the average total cost to produce four units is _________.1. Upon signing the lease and paying 5,000 php, how large are ACME’s fixed costs? Its sunk costs?2. One day after signing the lease, ACME realizes that it has no use for the railcar. A farmer has a bumper crop of corm and has offered to sublease the railcar from ACME at a price of 4,500 php. Should ACME accept the farmer’s offer? Why or why not?A purely competitive firm finds that the market price for its product is $25.00. It has a fixed cost of $100.00 and a variable cost of $10.00 per unit for the first 50 units and then $30.00 per unit for all successive units. Instructions: Round your answers to 2 decimal places. a. Does price equal or exceed average variable cost for the first 50 units? (Click to select) No Yes What is the average variable cost for the first 50 units? b. Does price equal or exceed average variable cost for the first 100 units? (Click to select) No Yes What is the average variable cost for the first 100 units? c. What is the marginal cost per unit for the first 50 units? What is the marginal cost for units 51 and higher? d. For each of the first 50 units, does MR exceed MC? (Click to select) No Yes What about for units 51 and higher? (Click to select) No Yes…
- Q1:(A) Assume the following cost data are for a purely competitive producer: total product average fixed cost Average variable cost Average total cost Marginal cost 0 $45 1 $60 $45 $105 $40 3 $20 $40 $60 $30 4 $15 $37.5 $52.5 $35 5 $12 $37 $49 $40 6 $10 $37.5 $47.5 $45 7 $8.57 $38.57 $47.14 $55 8 $7.50 $40.63 $48.13 $65 9 $6.67 $43.33 $50 $75 10 $6 $46.50 $52.5 At a product price $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 profits or loss will the firm realize per unit of output ? Use MR-MC approach also show economic profit graphically.Question 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.1. A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than A. $100 per pound. B. $20 per pound. C. $80 per pound. D. $40 per pound. E. $60 per pound. 2. If a firm is currently producing zero output, total costs equals A. average variable costs. B. marginal costs. C. zero. D. total variable costs. E. total fixed costs. 3. Here are three things that you could do if you do not attend your next-door neighbor's barbecue: watch television with some friends (you value this at $8), read a good novel (you value this at $4), or go in to work (you could earn $6 during the barbecue). The opportunity cost of going to your neighbor's barbecue is A. $6, because this is the only alternative of the three where you actually receive a monetary payment. B.…
- A computer company produces affordable, easy-to-use home computer systems and has fixed costs of $250. The marginal cost of producing computers is as indicated below. Output Fixed Cost Variable Cost Total Cost Marginal Cost Average Cost Average Variable Cost 1 $250 $700 $950 $700 2 $250 $925 $1175 $225 3 $250 $315 4 $250 $360 5 $250 $400 6 $250 $450 7 $250 $550 If the company sells the computers for $550, is it making a profit or a loss? How big is the profit or loss? If the firm sells the computers for $315, is it making a profit or a loss? How big is the profit or loss? We expect the marginal cost to increase as this firm produces more computers. But when the firm shifts from producing 1 to 2 computers, marginal cost falls. What might explain this?5. Explain what is the relationship between marginal cost and average total costs for a firm or industry exhibiting each of the following:a. Economies of scale.b. Constant returns to scale.c. Diseconomies of scale.Assume that a firm in a perfectly competitive industry has the following total cost schedule:OUTPUT (UNITS) TOTAL COST ($) 10 110 15 150 20 180 25 225 30 300 35 385 40 480a. Calculate a marginal cost and an average cost schedule for the firm. b. If the prevailing market price is $17 per unit, how many units will be produced and sold? What are profits per unit? What are total profits? c. Is the industry in long-run equilibrium at this price?