ii. Based on your answers to the table above, identify the profit maximizing quantiy supplied by the firm. Calculate the amount of profit/loss at this optimal point. Show your work. 4 Marks ii. State and examine the characteristics for a perfectly competitive firm such as Dodi Ltd selling cabbages. 4 Marks
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- Q21 A perfectly competitive firm... a. Maximises profit by producing where P = AVC. b. Can improve its competitive position and sell more output by advertising. c. Maximises profit by producing where P = ATC. d. Will not produce at all if P < the minimum of AVC. e. Will not produce at all if P < ATC.Suppose that a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations What is the accounting profit for the family farm?Suppose that for a particular perfectly competitive firm the AVC function is given by: AVC=200-7.5Q +.267Q2 and FC is equal to $250. Suppose also that the current market price equals $140. a. Find the MC curve for this firm. b. Find the profit maximizing output (note: you will need a quadratic equation solver - use Math is Fun quadratic equation solver if you like) but you will need to come up with the quadratic equation in your answer and indicate what a, b and c are equal to, then you are allowed to pick the bigger Q (the smaller Q will not be profit maximizing). You may round the Q you find to the nearest whole number. c. Calculate profits at this level of output. d. Should the firm produce at the output you found in part C or should it shut down temporarily? Explain. e. Now, confirm your answer in part d by finding the unique market price below which the perfectly competitive firm would want to shut down. Explain your answer.
- All firms in a perfectly competitive industry have a cost function given by: 10Q^2+200Q+2250. What is the profit maximizing quantity of each firm if the current market price is $500? What does each firms profit equal? Give typing answer with explanation and conclusionThis is related to a competitive market player (company): Please refer to the figure above. The competitive market player will produce ____ units of output. A)0 B)45 C)90 D)100Suppose a perfectly competitive firm is operating in short run. The information of MR, Q, ATC and AVC are 25 taka, 60 unit, 35taka and 15taka respectively. Calculate firm’s profit/loss and total fixed cost. From these calculations and based on all the given information, can you conclude about the firm’s decision in short run? Explain your reasoning with the help of a suitable diagram. Show all the relevant information in your diagram.[Q=profit maximizing output and MR=marginal revenue]. Don,t copy from anywhere. Answer must be correct. Do step by step
- A textile firm in a competitive industry employs a particularly efficient manager torun the operations at its production facility. In the textile industry, a plant managertypically makes a salary of $4,500 per month. The textile firm employing thesuperior manager faces the LAC and LMC curves shown in the figure below. Inlong-run competitive equilibrium, the price of the product is $9. a- . If the superior plant manager also owned the textile firm, she would earn$___________ of economic profit. Explain your answerSuppose a perfectly competitive firm is operating in short run. The information of MR, Q,ATC and AVC are 15 taka, 60 unit, 45taka and 35 taka respectively. Calculate firm’sprofit/loss and total fixed cost. From these calculations and based on all the giveninformation, can you conclude about the firm’s decision in short run? Explain your reasoningwith the help of a suitable diagram. Show all the relevant information in yourdiagram.[Q=profit maximizing output and MR=marginal revenue]Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MCMC), average total cost (ATCATC), and average variable cost (AVCAVC) curves shown on the following graph. The following diagram shows the market demand for steel. Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of steel would be per ton. At that price, firms in this…
- Jessy is the manager of a watch company that is consider under perfectly competitive firm. The cost of producing watches is given by C = 300 + 3Q2, where Q is the level of output and C is total cost. If the price of watches is P54, how many watches should Jessy produce to maximize profit? Does the firm profit? Should it shut down in the short run? ExplainCase A: Jackie Brown Company.Suppose you are the economic advisor of Jackie Brown Company, a perfectly competitive company that is suffering economic losses due to unforeseen continuous drop in the market price. Jackie Brown is a price taker; hence it cannot influence the market price, nor could it change production technology in the short run. You are asked to decide whether the company should shut down its operations or to continue to operate at a loss. Jackie Brown is selling 50 units of output per day, at a price of $20 per unit. The cost of raw material, direct labor, energy, and other variable inputs is about $24000 monthly. Unfortunately, an estimate of Jackie Brown fixed costs is currently unavailable.So, what is your decision? Justify your answer.The Emerald Company, a firm in the perfectly competitive custom jewelry industry, asks you for your expert economic opinion. They tell you the following: Total revenue is $110,000, Total fixed costs are $80,000 Total variable costs are $100,000 Marginal cost is $220/unit Quantity produced is 550 unit What is your advice based upon the information above? Keep operating and do not change the current production level. Keep operating and increase production Keep operating but decrease production Shut-down immediately
