Draw the cost curves for a typical firm. For a given price, explain how the firm chooses the level of output that maximizes profit. At that level of output, show on your graph the total revenue of the firm. Show its total costs.
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- Draw the cost
curves for a typical firm. For a given price, explain how the firm chooses the level of output that maximizes profit. At that level of output, show on your graph the total revenue of the firm. Show its total costs.
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- A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $200. What is its profit? What is its marginal cost? What is its average variable cost?The value of marginal revenue is $35 and the value of marginal cost is $30 Is the firm maximizing profits?What is the lowest price where the firm makes positive profit?
- Tomato Farms is selling tomatoes in a purely competitive market. Its output is 25,000 bushels, which sell for $30 a bushel. At this level of output, the marginal cost is $30 a bushel, average variable cost is $30.50 a bushel, and average total cost is $34.50 a bushel. (a) What is the firm’s total fixed cost? You must show your work.The shapes of firms' cost curves are important because they help us determine how the firm will produce. cost curves tell us the profitability of the firm. cost curves give us an idea of what a firm's total revenues will be at different output levels. they help us understand the market that the firm is in.At its current level of production a profit-maximizing firm in a competitive market receives $15 for each unit it produces, and faces an average cost of $10. At the market price of $15, the firm’s marginal cost curve crosses the marginal revenue curve at an output level of 1,000 units. A. Draw a diagram that depicts the typical firm in this market. B. What is the firm’s current profit? C. What changes are likely to occur in this market and why?
- (Figure: Profits)How much profit is the firm making at the profit-maximizing quantity? a profit of $300 The firm is not making a profit—it is making a loss of $300. a profit of $70 The firm is not making a profit—it is making a loss of $70.Show on the graph the profit-maximizing output level Q*. Show on the graph a rectangle that represents the amount of the economic profit (or loss) associated with the profit-maximizing output level. Is there a loss or a profit?Tulip growing is perfectly competitive and all growers have the same costs. The market price is $25 a bunch, and each grower maximizes profit by producing 2,000 bunches a week. The average total cost is $20 a bunch, and the average variable cost is $15 a bunch. The minimum average variable cost is $12 a bunch. Please draw graphs where necessary. What is the economic profit that each grower is making in the short run? What is the price at the grower’s shutdown point? What is each grower’s economic profit at the shutdown point?
- In the long run, firms in a competitive marketA.earn positive accounting profit, but zero economic profit.B.earn zero accounting profit and zero economic profit.C.shut down because their accounting profit goes to zero.D.earn negative accounting profit, but positive economic profit.If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will A. keep producing in the short run but exit the market in the long run. B. shut down in the short run but return to production in the long run C. shut down in the short run and exit the market in the long run. D. keep producing both in the short run and in the long run.Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $25 each. His total cost each day is $300, of which $60 is a fixed cost. He mows 15 lawns a day. In the short run, Bob should shut down or not shut down. In the long run, Bob should exit or not exit the industry.