Suppose a firm's marginal cost is increasing as it produces more output. Then the firms is said to be experiencing which of the following? a.increasing returns to scale b.diminishing
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- A Milton company works in perfect competition market, its total cost curve in short run isgiven in this function:TC = 200 − 4Q + 0.5Q2a. What output level should the firm produce to maximize profit? knowing that averagerevenue is $10.b. What is the firm profit at this level of output?Q3. The law of diminishing returns applies only to businesses with very simply production. Your Answer and Graph:Bob's lawn mowing service is a profit maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. What can you say about Bob's economic and accounting profits in the short run ? A. Economic profits are minus $10 and accounting profits are $20 B.Economic profits are $20 and accounting profits are minus $10 C. None Which one?
- Laura’s cleaning service is a profit-maximising, competitive firm. Laura cleans awhole house for $156. Her total cost each day is $1680, of which $480 is a fixed cost. She cleans 8 houses a day.(a)Should Laura shutdown her business in the short-run, assuming that she cannot recover her fixed cost?(b) Should she exit in the long-run?Ball Bearings, Inc. faces costs of production as follows:Table 1: Ball Bearing Inc. Production CostsQuantity Total Fixed Cost Total Variable Cost0 100 01 100 502 100 703 100 904 100 1405 100 2006 100 360(a.) Calculate the company’s average fixed costs, average variable costs, average total costs, and marginal costsat each level of production.(b.) The price of a case of ball bearings is 50. Seeing that she can’t make a profit, the Chief Executive Officer(CEO) decides to shut down operations. What are the firm’s profits/ losses? Was this a wise decision?Explain.(c.) Vaguely remembering his introductory economics course, the Chief Financial Officer tells the CEO it isbetter to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity.Dylan's house-cleaning enterprise is a competitive firm. Dylan cleans houses for 39 € cach. His total cost ach day is 380€, of which 30€ is a fixed cost. He cleans 10 houses a day. What can you say about Dvlan's short-run decision regarding shut down and his long-run decision regarding exit.
- Nabil cleaning service is a profit-maximizing, competitive firm. Nabil cleanswashroom for $25 each. His total cost each day is $260, of which $30 is a fixed cost.He deep cleans 10 toilets a day.a. What can you say about Nabil’s short-run decision regarding shutdown andb. What is his long-run decision regarding exit?Explain each decision with diagram.40) When a decrease in the scale of production leads to higher average costs, the industry exhibitsA) diminishing returns. B) decreasing returns to scale.C) constant returns to scale. D) increasing returns to scale.A profit-maximising firm in a competitive market is currently producing 1,000units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000.a) What is its profit?b) What is its marginal cost?c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
- Find the value of A,B,C,D & E. Add $8 with FC. New FC=$10, now assuming quantity and variable cost remain the same, Create a new table and find the value of TC,AFC,AVC,ATC and; MC.Suppose a firm's marginal cost is increasing as it produces more output. Then the firm is said to be experiencing which of the following? a.increasing returns to scale b.diminishing returns to scale c.losses d.profitIncreasing returns and imperfect competition: (a) The production function for the word processor is Y = X – 100 million if X is larger than 100 million, and zero otherwise. By spending $100 million, you create the first copy, and then $1 must be spent distributing it (say for the DVD it comes on). For each dollar spent over this amount, you can create another copy of the software. (b) The production function is plotted in Figure 6.5. Output is zero whenever X is less than 100 million. Does this production function exhibit increasing returns? Yes. We spend $100 million (plus $1) to get the first copy, but doubling our spending will lead to 100 million copies (plus 2). So there is a huge degree of increasing returns here. Graphically, this can be seen by noting that the production function “curves up” starting from an input of zero, a common characteristic of production functions exhibiting increasing returns. (Constant returns would be a straight line starting…
