If a competitive firm is selling 500 units of its product at a price of $8 per unit and earning a positive profit, then O its average revenue is greater than $8. O its marginal revenue is less than $8. its total cost is less than $4,000. O All of the above are correct.
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- Assume that the marginal revenue equals rising marginal cost at 100 units of output. At this output level, a profit-maximizing firm's total fixed cost is $700 and its average variable costs are $5. If the price of the product is $4 per unit and the firm produces the profit-maximizing level of output, How much profit firm will earn ?Q3: a. If a competitive firm is making loss in the short run, and it is selling a (100) units of a good at S.R(9). To be known that the AVC is S.R(10). What should the firm decide? If the quantity produced changed from 1 to 2, the total cost changed from 64 to 80 and the price is 40. b. What is the total revenue? c. What is the marginal cost?A firm has excess capacity if its output is: more than the quantity at which average total cost is minimized. less than the quantity at which economic profit is maximized. O less than the quantity at which marginal cost is minimized. less than the quantity at which average total cost is minimized.
- The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expressionTC 1000+2Q+0.01Q2a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answerb) At profit maximizing level what is firm total cost, total revenue and marginal cost c) Why does a competitive firm is considered as a price taker and Monopoly firm as a price makerThe market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the total cost equation of an individual firm in the industry is given by the expressionTC 1000+2Q+0.01Q2a) What is the firm’s profit-maximizing output level and profit? Is this profit normal profit or supper normal profit? Justify your answerb) At profit maximizing level what is firm total cost, total revenue and marginal costc) Why does a competitive firm is considered as a price taker and Monopoly firm as a price maker.40) A perfectly competitive firm will earn ________ economic profits in the range of output for which the firm's price is above its minimum average total cost. A) positive B) negative C) zero D) Any of the above answers could be correct. 41) If a perfectly competitive firm's average total cost curve is below its demand schedule at any level of output, then the firm will earn ________ profits. A) positive B) breakeven C) negative D) zero 42) A perfectly competitive firm ________ at the level of output where P = ATC. A) earns an economic profit B) suffers an economic loss C) breaks even D) shuts down 43) If P = MC and MC ATC, then a perfectly competitive firm will earn ________ profits. A) positive B) zero C) negative D) break-even 44) If a perfectly competitive firm is currently producing where P = MC and MC = ATC, then the firm will earn ________ profits. A) positive B) zero C) negative D) above normal 45) If…
- A Milton company works in perfect competition market, its total cost curve in short run is given in this function:TC = 200 − 4Q + 0.5Q2a. What output level should the firm produce to maximize profit? knowing that average revenue is $10.b. What is the firm profit at this level of output?Should a firm shut firm if its revenue is R = $1,500 per week and: a. Its variable cost is VC = $1,100 and its sunk fixed cost is F = $800? b. Its variable cost is VC = $1,600 and its fixed cost is F = $600? c. Its variable cost is VC = $1,100 and its fixed cost is F = $1000 ($800 of which is avoidable if it shuts down)?The total revenue curve of a firm is R(q) = 40q − 12q2 and its average cost A(q) = 1/30 q2 − 12.85q + 20 +400/q, where q is the firm's output. i. Derive an expression C(q) for the firm's total cost function.ii. Derive an expression Π(q) for the firm's profit function.iii. Is the rate of change of profit increasing or decreasing when theouput level of the firm is 10 units?iv. Determine the level of output for which the firm's profit is maximized.v. What is the firm's maximum profit?
- Suppose the marginal cost and marginal revenue (in ¢000) for a product produced by a company is estimated to beMC=q+35 MR=560+22q−q2Where q is the quantity produced and the firm’s break-even is 5 units per weekYou are Required to1. determine the total cost and the total revenue function in terms of q.2. estimate the output at which profit is maximize3. calculate the maximum profitA perfectly competitive firm's marginal cost function is MC = 30 + 3q. The firm's short-run supply curve is O A. q = 30 + 3P. OB. q - 30 + 3P. OC. q = 10 + 0.33P. O D. q= 10 +0.33P.If price is greater than average variable cost and less than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will: shut down production. O produce at an economic profit. O produce at an economic loss. O produce more than the profit-maximizing quantity.
