Suppose the market price (P*) is $3.00 perunit and the profit-maximizing output level(Q*) is 2,500 units (where MR = MC). Whenthe average fixed cost (AFC) is $1.00 and thetotal variable cost (TVC) is $5,000.00, thefirm earnsin economic profits.$0.00$5.00$500.00$100.00

Economic Profit = Total Revenue - Total cost total cost = Total fixed cost + Total variable cost or…

Suppose the market price (P*) is $3.00 per unit and the profit-maximizing output level (Q*) is 2,500 units (where MR = MC). When %3D the average fixed cost (AFC) is $1.00 and the total variable cost (TVC) is $5,000.00, the firm earns in economic profits. $0.00 $5.00 $500.00 $100.00

Suppose the market price (P) is $3.00 per unit and the profit-maximizing output level (Q) is 2,500 units (where MR = MC). When %3D the average fixed cost (AFC) is $1.00 and the total variable cost (TVC) is $5,000.00, the firm earns in economic profits. $0.00 $5.00 $500.00 $100.00

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter10: The Firm And The Industry Under Perfect Competition

Section: Chapter Questions

Problem 4TY

See similar textbooks

Related questions

Q: A two-product firm faces the following demand and cost functions: Qi = 40 – 2P, - P2 (0) Find the…

Q: A firm with two plants, A and B, has the following estimated demand and marginal cost functions: Qd…

A: Marginal cost is the additional cost incurred to produce an additional unit of output .

Q: You own a firm with a total cost function of: TC = 40 + 150, where Q is the number of output. As you…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: If the profit function for a firm is given by P(x) = −3800 + 210x − x2 and limitations on space…

A: The profit function for a firm is given by P(x)=-3800+210x-x2 At Break Even point the profit of the…

Q: Suppose a firm has the following total cost function TC = 100 + 2q2. If price equals $20, what is…

A: A firm sets the price and quantity at the point where marginal revenue is equal to the marginal…

Q: A firm's short-run cost function is given by: C (q) = 50 + 10q – 6q² + q³ |3D What is the lowest the…

A: Cost function: The production function model is used by management to run numerous production…

Q: Suppose the firm achieves total revenue of $1,000 by selling 150 units while facing total costs of…

A: The marginal revenue must be compared to the marginal cost of production to know if the firm must…

Q: A firm produces a product in a competitive industry and has a total cost function (TC) of TC(q) = 90…

A: Profit can be maximized at the point where Price = Marginal cost that is P=MC and marginal revenue…

Q: You are considering quitting your job where you earn $3,500 per month and opening a new business.…

A: Here, it is given that an individual quits his job to start a business in which he pays various…

Q: Suppose that a firm’s fixed costs is $80, and variable costs per unit are $(2Q + 16). The demand…

A: The break-even point is where the total revenue is equal to total cost. This means what the firm…

Q: Which of the following costs are important to consider when making short run decisions for a firm *…

A: We know that in the short run, there are both fixed and variable costs. Since some factors or input…

Q: A firm has the following revenue and cost functions: TR = 100 Q – 4Q2 TC = 300 +40 Q + 2Q2 Determine…

A: Given TR= 100Q-4Q2 TC= 300+40Q+2Q2 The condition for profit maximization is MR=MC MR is the…

Q: conomist estima Cost function of a single-product firm C(Q) = 100 + 20Q + 15Q2 + 10Q³ Based on this…

A: Variable costs are any expenses that change based on how much a company produces and sells. This…

Q: A firm's short-run cost function is given by: C (q) = 50 + 10g – 6q² +q? What is the lowest the…

A: Given: Cost function: =50+10q-6q2+q3 To find: lowest price

Q: Table: Total Cost for a Perfectly Competitive Firm Quantity per Period Total Cost $10 16 2 3 20 22 4…

A: Upto price of $45,firm would produce at a non negative profit.

Q: A firm has the following demand and average total cost functions: Q = 30 − P ATC =7/Q− 6 +1/2 Q…

A: Q = 30 − P P = 30-QATC =7/Q− 6 +1/2 Q Total Revenue (TR) = PXQ = 30Q-Q2 Total Cost (TC) = ATCXQ TC…

Q: If price per unit is $21 and output is 16 units What will be the total revenue the firm will…

A: The information being given is:- Price per unit = $21 Output = 16 units Total revenue is to be…

Q: SleazeCo manufacturers wind turbines (that produce electricity) for sale in Texas. They currently…

A: Given Information Demand curve of SleazeCo P = $350,000-5q Marginal Revenue function MR = $350,000…

Q: A firm has two plants with marginal costs: MC1(y )=3y+2 and MC2(y )=8y. Assuming that the firm is a…

Q: Suppose that the manager of a firm operating in a competitive market has estimated the firm's…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Table: Total Cost for a Perfectly Competitive Firm Quantity per Period Total Cost $10 16 20 3 22 24…

A: Note: In the BNED Guidance, only the first question can be answered at a time. Resend the question…

Q: The total cost of a firm is TC(Q)=3Q2+4Q+34. Accordingly, its marginal cost is 2*3*Q+4 when its…

A: ATC is nothing but the average total cost which can be calculated dividing the total cost by the…

Q: If a firm makes zero economic profit, then the firm A. has total revenues greater than its…

A: The difference between the total revenue received by the firm from its sales and the total…

Q: Suppose that the marginal-revenue function for a manufacturer's product is = 100 – q², the…

A: The demand function of a good represents the relationship between price and quantity demanded of a…

Q: The total cost of a firm is TC(Q)=4Q2+6Q+34. Accordingly, its marginal cost is 2*4*Q+6 when its…

A: Answer to the question is as follows :

Q: The cost function for a firm is given by C(Q) = 5+q^2. If the firm sells output in a perfectly…

A: Given: C(Q) = 5+q2 P=$20 In perfectly competitive market all the firms are price takers. Therefore,…

Q: A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has…

A: Profit maximization: It is the ability of a business to earn maximum profit at a low cost.

Q: Solve the attahment.

A: Given: Cost function: C(Q) = 100 + Q2 Price = $10

Q: Suppose that the manager of a firm operating in a competitive market has estimated the firm's…

A: Average variable cost(AVC) tells us how much a business company spends on its variable inputs( such…

Q: The total revenue curve of a firm is R(q) = 40q − 12q2 and its average cost A(q) = 1/30 q2 − 12.85q…

A: R(q) = 40q − 12q2 A(q) = 1/30 q2 − 12.85q + 20 + 400/q Total cost = A(q) * q

Q: A firm’s demand function is P= 60 − 0.5Q If fixed costs are 10 and variable costs are Q + 12 per…

A: Profit is the amount which a producer earns over and above of all the costs. We can calculate profit…

Q: The water bottle manufacturing company in Muscat facing the following demand function P=1000-10Q.…

A: The equilibrium price and equilibrium quantity of a good sold in the market are determined by the…

Q: A firm has a short-run total cost function given as STC =q³5q² + 25q. a. If P = 100, identify the…

A: Answer; a) Profit maximising quantity , q = 15 Profit = 1125 b) Profit…

Q: A price-setting firm faces a demand curve described by the equation P = 100 - 5Q and its total…

A: TC = 12 + 30q MC = dTC/dQ = 30 P = 100 – 5q TR = P * q = (100 – 5q) * q = 100q – 5q2 MR = dTR/dQ =…

Q: A multiproduct firm’s cost function was recently estimated as C( Q1,Q2 ) = 90 − 0.5 Q1 Q2 + 0.4Q21+…

A: First of all Economies of scope meaning is to see whether producing two good separably costs more…

Q: Refer to Scenario 14-2. To maximize its profit, the firm should increase its output. continue to…

A: Perfect competition is a market structure where a single firm has no effect on the price of the…

Q: A firm produces a product in a competitive industry and has a total cost function C = 80 + 4q + 2q2…

A: A perfectly competitive market is one of the market structures where the sellers sell identical…

Q: A business firm produces and sells a particular Variable cost is P30/unit. Selling price is P40 per…

A: Given informations: Variable cost = P30 per unit Selling price = P40 Fixed cost = P60000

Q: A firm's efficiency decision O always means hiring labor that will work for the lowest possible…

A: Efficiency refers to the equilibrium condition where social demand equals social cost.

Q: Suppose the marginal cost and marginal revenue (in ¢000) for a product produced by a company is…

A: Given: MC=q+35 (in ¢000) MR=560+22q−q2 (in ¢000)

Q: A profit-maximizing firm in a competitive market produces small rubber balls. When the market price…

A: The average cost is the ratio of the total cost to quantity. The average cost rises with the fall in…

Q: The Bowery Hotel is located on Third Street in Manhattan. Suppose the hotel has explicit costs of…

A: We are given, Explicit cost = $200,000 Implicit cost = $50,000 Economic profit = $50,000 We need to…

Q: Damai Biru Sdn. Bhd. is a firm selling homogenous product in a competitive market. It has the…

A: A perfectly competitive firm is a price taker, meaning they accept the market price as given

Q: The market determined price in a perfectly competitive industry is P = Rs. 10. Suppose that the…

A: Perfectly competitive market is a market structure in which there are many buyers and sellers…

Q: For output levels of 1, 2, 3, 4, 5 and 6 units, a competitive firm's total costs are $142, $172,…

A: Profit maximize when MC = MR MC is marginal cost and calculated by MC = (TCn - TCn-1)/(Qn - Qn-1)…

Question

Suppose the market price (P*) is $3.00 per
unit and the profit-maximizing output level
(Q*) is 2,500 units (where MR = MC). When
the average fixed cost (AFC) is $1.00 and the
total variable cost (TVC) is $5,000.00, the
firm earns
in economic profits.
$0.00
$5.00
$500.00
$100.00

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

4. Assess which of the following is true and which is false.A firm’s profit equation is given by π = -100 + 160Q – 20Q2. Therefore,a) The firm’s fixed cost is 100.b) The firm’s fixed cost is 40 and variable cost is 20.c) Marginal profit is Mπ = 160 – 20Q.d) The firm’s profit-maximizing output is Q = 4.e) Marginal profit is Mπ = 160 – 40Q and it is positive for quantities that are lower than theprofit-maximizing quantity.
Output AFC AVC ATC MC 1 300 100 400 100 2 150 75 225 50 3 100 70 170 60 4 75 73 148 80 5 60 80 140 110 6 50 90 140 140 7 43 103 146 180 8 38 119 156 230 9 33 138 171 290 10 30 160 190 360 Refer to the chart above. If the market price is $179, the per-unit economic profit at the profit maximizing output is what? 15 23 33 39
A local microbrewery has total costs of production given by the equation TC=500+10q+5q2. This implies that the firm's marginal cost is given by the equation MC=10+10q (you do not need to be able to show this). The market demand for beer is given by the equation QD=105 – (1/2)*P. a) Write the equations showing the brewery's average variable cost.
Now suppose firm X undertakes a process innovation that reduces its marginal cost ofproduction from $20 to $15. The fixed cost of undertaking this process innovation is F > 0. Is this atough commitment or a soft commitment? Why? For what values of F would it make sense for firm Xto make this commitment?
Highest price where quantity of output is equal to zero = R1200P*= R650MC at Q*= R260AVC at Q*= R150AFC at Q*= R300Price at allocative efficient output level = R400Allocative efficient level of output = 180 unitsTotal fixed cost = R33000MC at output equal to zero = R100 1.1. Assuming profit maximising behaviour, calculate each of the following for Firm M. ATC = RQ*= unitsProfit / loss = RLerner index = Mark-up = Consumer surplus = RDeadweight-loss = RTVC = R
A price-taking firm in a competitive industry of a good that is continuously divisible (like sand) has a total cost function TC(Q) = 3.5Q^2 + 100Q + 500. The market price for the good is p = $240. a: Carefully write out this firm’s profit maximization problem, using the particulars of thisproblem. b: Give the marginal condition (equation) that characterizes the solution to this problem. Solvethis condition for the firm’s optimal quantity Q*. c: Calculate the firm’s maximized profit. d: On a graph with quantity on the horizontal axis, neatly plot the marginal revenue curve andmarginal cost curve. Show Q* on your graph. e: Label areas on your graph using a, b, c, etc. and indicate the areas that correspond to totalrevenue and variable cost.
Please help ASAP What is the firm's fixed cost? What is the profit-maximizing level of output? Given that half of the fixed cost is avoidable and the firm produces at the optimal level of output, what is the firm's avoidable cost? Should the firm shut down its production? yes or no
A manufacturing firm faces the cost of production as follows : Quantity Total Fixed Costs Total Variable Costs 0 $ 100 0 1 $ 100 $ 40 2 $ 100 $ 60 3 $ 100 $ 80 4 $ 100 $ 130 5 $ 100 $ 190 6 $ 100 $ 350 (a) Calculate the company's average fixed costs, average variable costs, average total costs,, and marginal costs at each level of quantity larger than zero (b) Suppose the price of the firm's product is $ 90, what is the firm's optimal production quantity? What is the firms profit under this quantity?
Natural-ExP is a unique company that is dedicated to making day trips to the Nevado de Toluca. The service includes transportation, food and guide service. Being the number of tickets sold, if the cost function of serving a new customer is Cmg = 20q, the marginal revenue function Img = 600−40q and the demand is q = (600 − p) /20. Under this scenario, what is the price of the excursion. $400 $600 $300 $100
A company manufacturing laundry sinks has fixed costs of $100 per day but has totalcosts of $2,500 per day when producing 15 sinks. The company has a daily demand functionof q = 360 − p, where q is the number if laundry sinks demanded and p is te price ofa laundry sink. ) If production increases continuously, what is likely to be the average cost per sink? How many laundry sinks will the company need to produce in order to maximise it′s profits? What is the maximum profit?
A local microbrewery has total costs of production given by the equation TC=500+10q+5q2. This implies that the firm's marginal cost is given by the equation MC=10+10q (you do not need to be able to show this). The market demand for beer is given by the equation QD=105 – (1/2)*P. a) Write the equations showing the brewery's average total cost .
A firm has a linear demand function for its product. When the price of the product isSh.220, the quantity demanded is 40 units. When the price increases to Sh.240, thequantity demanded becomes 30 units. In addition, the firm’s marginal cost function isgiven by:MC = 40q – 2q2 + 2Fixed cost = Sh.5 millionWhere q = quantity demanded, MC = marginal cost (Sh. million)Evaluate the level of output that maximizes profits.