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- 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.Show that for a proit-maximizing firm producing at its optimal quantity, y, its average total costis minimized when marginal cost is equal to average total cost. Some tips to get you started: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.
- i. Calculate the marginal cost, marginal revenue and profit for each unitof production. ii. How many units should the firm produce to maximise profit?c) what is the profit or loss at the profit maximizing output?D. List 2 (in numbers) 2 implicit costs that Jon has not included. E. What is Jon’s pure economic profit (or loss) in numbers?
- solve the following: d. what is the marginal cost when the firm increases the output from 5 to 6? e. the economic profit is maximized at output equal to?Calculate economic and accounting profit, and explain the importanceof the difference.c) A certain brand of vacuum cleaners can be purchased from several local stores as well as from several websites. If all sellers charge the same price for the vacuum cleaner, will they all earn zero economic profit in the long run? If all sellers charge the same price and one local seller owns the building in which he does business, paying no rent, is this seller earning a positive economic profit?
- Is the Marginal cost(MC) and Marginal Revenue(MR) answers correct? See the table aboveBob’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?Why do profit maximizing firms always produce output at MC = MR? Draw graph and use example
