c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddiesprofit or loss be per week?d. Now assume the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds. What willBuddies profit or loss be per week?e. Buddies earns a normal profit whenmarginal cost equals average cost.average cost equals average revenue at the minimum of average cost.marginal cost equals marginal revenue at the minimum of marginal cost.marginal cost equals average cost at the minimum of average cost. The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm thatproduces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 perpair.Buddies Production CostsQuantityMCATCof Ear Buds($)($)252.20302.022.17352.452.21403.572.38454.002.56505.462.85555.933.13608.533.58Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places.a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week?pairsb. At the profit-maximizing quantity, what is the total cost of producing ear buds?

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Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 3P

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Question

c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies
profit or loss be per week?
d. Now assume the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds. What will
Buddies profit or loss be per week?
e. Buddies earns a normal profit when
marginal cost equals average cost.
average cost equals average revenue at the minimum of average cost.
marginal cost equals marginal revenue at the minimum of marginal cost.
marginal cost equals average cost at the minimum of average cost.

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that
produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per
pair.
Buddies Production Costs
Quantity
MC
ATC
of Ear Buds
($)
($)
25
2.20
30
2.02
2.17
35
2.45
2.21
40
3.57
2.38
45
4.00
2.56
50
5.46
2.85
55
5.93
3.13
60
8.53
3.58
Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places.
a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week?
pairs
b. At the profit-maximizing quantity, what is the total cost of producing ear buds?

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