Consider the market for running shoes. Draw a firm's average total cost curve with no advertising. Label it ATC Draw the firm's average total cost curve with advertising. Label it ATC₁. If the firm successfully advertises, the quantity produced increases such that A. total cost increases and average total cost increases OB. total cost decreases and average total cost increases C. total cost increases and average total cost decreases OD. total fixed cost decreases

Consider the market for running shoes. Draw a firm's average total cost curve with no advertising. Label it ATC Draw the firm's average total cost curve with advertising. Label it ATC₁. If the firm successfully advertises, the quantity produced increases such that A. total cost increases and average total cost increases OB. total cost decreases and average total cost increases C. total cost increases and average total cost decreases OD. total fixed cost decreases

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 7PA

See similar textbooks

Similar questions

What two lines on a cost curve diagram intersect at the zero-profit point?
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
What two lines on a cost curve diagram intersect at the shutdown point?
Don't use chatgpt or any AI A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
The relationship between the firm's average variable, average total, and marginal cost curves above: Marginal Reveue = Price = US $ 2.50 ; a) Use the graph to find the Firm's profit-maximizing output. b) If the firm maximizes its profit, how much profit does it make (about)? Should the firm stay in business? c) Will other firms with costs the same as Firms enter the market? Explain.
Bob’s lawn-mowing service is a profit-maximizing,competitive firm. Bob mows lawns for $27 each. Histotal cost each day is $280, of which $30 is a fixedcost. He mows 10 lawns a day. What can you sayabout Bob’s short-run decision regarding shutdownand his long-run decision regarding exit?
i. Calculate the marginal cost, marginal revenue and profit for each unit of production. ii. How many units should the firm produce to maximise profit?
i. Calculate the marginal cost, marginal revenue and profit for each unitof production. ii. How many units should the firm produce to maximise profit?
Buffy is thinking about opening an amulet store. Sheestimates that it would cost $350,000 per year to rentthe location and buy the merchandise. In addition,she would have to quit her $80,000 per year job as avampire hunter. Buffy thinks she can sell $400,000 worth of amulets in a year. What would her accountant consider the store’s profit? 2. Should Buffy open the store? Explain.
5. The daily demand for rooms at a motel is given by P=100-2Q. Assume that the motel has 40 rooms. 5a. If total variable costs of running this motel are zero, find the price that maximizes profit and find the number of rooms rented at that price. Remember that profit is total revenue (i.e., TR = PQ) less total cost (i.e., the sum of variable costs and fixed costs). 5b. If the incremental cost of renting a room is $9 (i.e., the cost of paying the maid to clean the room, the cost of providing clean towels, the cost of the little pieces of chocolate that is placed on the bed, etc. is $9), find the price that maximizes profit and the number of rooms rented at that price.
for this graph answer the following question what is the total revenue? what is the total profit? what is the maximun point?
A computer company produces affordable, easyto-use home computer systems and has fixed costs of$250. The marginal cost of producing computers is $700for the first computer, $250 for the second, $300 for thethird, $350 for the fourth, $400 for the fifth, $450 for thesixth, and $500 for the seventh.a. Create a table that shows the company’s output,total cost, marginal cost, average cost, variablecost, and average variable cost.b. At what price is the zero-profit point? At whatprice is the shutdown point?c. If the company sells the computers for $500, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.d. If the firm sells the computers for $300, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.