The table below shows the total costs faced by Gregory's Jewelry firm for differentquantities of necklaces sold.Quantity012345678910Total Cost$64$79$98$120$145$171$198$228$262$305$353Gregory's Jewelry firm sells necklaces in a perfectly competitive market with adownward sloping demand curve and an upward sloping supply curve. The marketprice is $32/unit.A. Calculate the average fixed cost of producing 8 units. Show your work.B. Identify the profit maximizing quantity. Explain using marginal analysis.C. Calculate the economic profit at the profit maximizing quantity you identified in PartB. Show your work.D. Based on your answer to Part C, will the number of firms in the industry increase,decrease, or stay the same in the long run? Explain.E. Based on your answer to Part C, will the market price increase, decrease, or stay thesame in the long run? Explain.F. The income elasticity of demand for necklaces is -3 and the cross price elasticity ofdemand for bracelets with respect to the price of necklaces is 0.1. Based on youranswer to Part E, what will happen to the demand for bracelets? Explain.G. Now assume that the market in which Gregory's Jewelry firm operates is in long runequilibrium at a price of $35/unit.i. Suppose the government imposes a price floor of $30/unit on the market fornecklaces. Will consumer surplus in the market for necklaces increase, decrease, orstay the same in the short run as a result of the price floor? Explain.ii. Suppose instead the cost of heating and air conditioning, a variable cost forGregory's Jewelry, decreases. Will the profit-maximizing quantity of necklaces forGregory's Jewelry firm increase, decrease, or stay the same in the short run? Explain.B I

According to marginal analysis, a profit-maximizing firm produces the level of output at which the…

The table below shows the total costs faced by Gregory's Jewelry firm for different quantities of necklaces sold. Quantity 0 1 2 3 4 5 6 7 8 9 10 Total Cost $64 $79 $98 $120 $145 $171 $198 $228 $262 $305 $353 Gregory's Jewelry firm sells necklaces in a perfectly competitive market with a downward sloping demand curve and an upward sloping supply curve. The market price is $32/unit. A. Calculate the average fixed cost of producing 8 units. Show your work. B. Identify the profit maximizing quantity. Explain using marginal analysis. C. Calculate the economic profit at the profit maximizing quantity you identified in Part B. Show your work.

The table below shows the total costs faced by Gregory's Jewelry firm for different quantities of necklaces sold. Quantity 0 1 2 3 4 5 6 7 8 9 10 Total Cost $64 $79 $98 $120 $145 $171 $198 $228 $262 $305 $353 Gregory's Jewelry firm sells necklaces in a perfectly competitive market with a downward sloping demand curve and an upward sloping supply curve. The market price is $32/unit. A. Calculate the average fixed cost of producing 8 units. Show your work. B. Identify the profit maximizing quantity. Explain using marginal analysis. C. Calculate the economic profit at the profit maximizing quantity you identified in Part B. Show your work.

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 9PA

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