The price of a case of ball bearings is $60. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations. The firm's profit in this case is 5 (Note: If the firm suffers a loss, enter a negative number in this cell.) True or False: This was a wise decision. True O False Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of bll bearings, because marginal revenue equals marginal cost at that quantity. At this level of production, the firm's profit is S . (Note: If the firm suffers a loss, enter a negative number in this cell.). True or False: This is the best decision the firm can make. O True O Falre

The price of a case of ball bearings is $60. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations. The firm's profit in this case is 5 (Note: If the firm suffers a loss, enter a negative number in this cell.) True or False: This was a wise decision. True O False Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of bll bearings, because marginal revenue equals marginal cost at that quantity. At this level of production, the firm's profit is S . (Note: If the firm suffers a loss, enter a negative number in this cell.). True or False: This is the best decision the firm can make. O True O Falre

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Firms In Competitive Markets

Section: Chapter Questions

Problem 4PA

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Delvin has a hot dog stand in a busy midtown area with similar stands on every block. The graph above shows the cost curves of Delvin’s Hot Dogs. The market price of a hot dog is $3. Answer the questions below and show all calculations where necessary. From the diagram, what is Delvin’s profit-maximizing output per day? Explain your answer. Calculate Delvin’s accounting profit per day. How will Delvin’s price and profit change in the long-run, assuming no change in technology or demand?
A firm sells 1,000 units per week. Suppose the average variable cost is $15, and the average cost is $55. In the short run, the break-even price is:___?_____. . In the long run, the break-even price is . Suppose the firm charges a price of $5 per unit. Use the following table to indicate whether the firm will shut down or continue to produce in the short run and the long run. Time Continue to Produce Shut Down Short Run ? ? Long Run ? ?
Use the following table and use your previous calculations: find the quantity where ATC is at a minimum and find the quantity that is the most efficient operating point for the firm. Total Output Total Cost TFC TVC AFC AVC ATC MC 0 $20 10 $40 20 $60 30 $90 40 $120 50 $180 60 $280 a. MC = ATC between 30 and 40 Quantity ATC at minimum between 20 and 40 Quantity b. MC = ATC at 30 Quantity ATC at minimum between 20 and 40 Quantity c. MC = ATC at 40 Quantity ATC at minimum between 20 and 40 Quantity d. MC = ATC between 30 and 40 Quantity ATC at minimum between30 and 40 Quantity e. MC = ATC between 20 and 40 Quantity ATC at minimum between 20 and 40 Quantity
Suppose the book-printing industry is competitive and begins in a long-run equilibrium. Then Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. The following graph shows Hi-Tech's initial marginal-cost curve (MC1MC1) and average-total-cost curve (ATC1ATC1) before the new technology, and its marginal-cost curve (MC2MC2) and average-total-cost curve (ATC2ATC2) after the new technology. Now suppose the patent expires and other firms are free to use the technology. Which of the following statements are true about what happens in the long run? Check all that apply. The market price stays at P1P1. Hi-Tech's average-total-cost curve rise back to ATC1ATC1. All firms earn zero profit.
The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry. a) At the optimal output, what price will Do Drop In charge and what will be its output? Price: $ Output: units b) At the optimal price and output, what will be its total revenue, total cost, and total loss? TR: $ ; TC: $ Total loss: $ c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level? AVC must be less than $ .
-Briefly discuss average costs, including how they are calculated, how they are typically appear on a graph, and what they relate to profitability. -Briefly explain what is meant by the term "fixed costs" and provide three examples of same. What determines a firm's level of fixed costs? -Briefly explain what is meant by the term "variable costs" and provide three examples of same. -Briefly explain how the total revenue for a profit-seeking firm is determined.
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
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Refer to the diagram above, in this instance, at the range of output represented a point c, the shutdown point has been reached profits will be maximized physical imput levels have been reduced capital imput levels have been reduced