There are 300 purely competitive farms in the local dairy market. Of the 300 dairy farms, 298 have a cost structure that generates profits of $24 for every $300 invested. Instructions: Enter your answers as a whole number. a. What is the percentage rate of return for these 298 dairies? percent b. The other two dairies have a cost structure that generates profits of $22 for every $200 invested. What is their percentage rate of return? percent c. Assuming that the normal rate of profit in the economy is 9 percent, and that firms cannot copy each other's technology, will there be entry or exit?

There are 300 purely competitive farms in the local dairy market. Of the 300 dairy farms, 298 have a cost structure that generates profits of $24 for every $300 invested. Instructions: Enter your answers as a whole number. a. What is the percentage rate of return for these 298 dairies? percent b. The other two dairies have a cost structure that generates profits of $22 for every $200 invested. What is their percentage rate of return? percent c. Assuming that the normal rate of profit in the economy is 9 percent, and that firms cannot copy each other's technology, will there be entry or exit?

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

See similar textbooks

Similar questions

Price (dollars per packet of chips) Quantity demanded (millions of packets of chips per year) Quantity supplied (millions of packets of chips per year) 4 135 26 5 104 53 6 81 81 7 68 98 8 53 110 9 39 121 C: Harry-Chips is a firm in the potato chips industry. Harry-Chips produces 10 million packets of chips per year at an average total cost (ATC) of $4. What is Harry-Chips short-run profit or loss per year? Explain your answer in detail. D: Given your answer in part d, would new firms enter or existing firms exit the market? What would be the long-run impact on Harry-Chips’ profit or loss? Explain in detail.
What would you expect to happen to these profit opportunities in the long-run? Hint: you are not the only person/business who can do this same process.
cc4. a)What is the largest number of thingamabobs that can be produced and sold for Yaster Inc. to break even? thingamabobs. Round to the nearest thingamabob. b)How many thingamabobs should Yaster Inc. produce and sell in order to maximize profit? thingamabobs. Round to the nearest thingamabobs.
When are you are you expecting companies to produce in the short run?A. costs equal equal revenueB. price equals marginal revenueC. Average costs equal marginal costsD.marginal revenue equals marginal cost
A perfect competitive firm estimates her cost function as given below: C = 100 + 5Q^2a. What is the firm’s fixed and marginal cost?b. If all other firms in the market sell the product at a price ¢20. How much should thisfirm charge for the product?c. What is the optimal level of output to maximize profits?d. How much profit will be earned?e. In the long run should this firm continue to produce or shut down? Why?
Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $250. Her variable costs are $1,800 for the first thousand posters, $1,500 for the second thousand, and then $900 for each additional thousand posters. a. What is her AFC per poster (not per thousand!) if she prints 1,000 posters? What if she prints 2,000 posters? What if she prints 10,000 posters? b. What is her ATC per poster if she prints 1,000? What if she prints 2,000? What if she prints 10,000? c. If the market price fell to 85 cents per poster, would there be any output level at which Karen would not shut down production immediately? Yes/No
Would independent trucking fit the characteristics of a perfectly competitive industry?
What are the four basic assumptions of perfect competition? Explain in words what they imply for a perfectly competitive firm.
A purely competitive wheat farmer can sell any wheat he growsfor $10 per bushel. His five acres of land show diminishingreturns because some are better suited for wheat productionthan others. The first acre can produce 1,000 bushels of wheat,the second acre 900, the third 800, and so on. Draw a table withmultiple columns to help you answer the following questions.How many bushels will each of the farmer’s five acres produce?How much revenue will each acre generate? What are the TR and MR for each acre? If the marginal cost of planting and har-vesting an acre is $7,000 per acre for each of the five acres, howm any acres should the farmer plant and harvest? Note:- Don't use pen or paper
Suppose the current market price for bar stools is $25 each. My friend René's profit-maximizing output is to produce 10 bar stools. If he produces 10 bar stools, his average variable cost will be $30 per unit and his average total cost will be $40 per unit. In the short run, what is René's profit?Hint: Should René keep operating or shut down? a.$150. b.$0. c.-$100. d.-$150.
Copy and complete the Table. iv. At what level of output does diminishing returns set in, explain your answer thoroughly. v. Suppose that the price of the firm’s product is GH¢30.00, how much will the firm produce to maximize profit? How much is total profit? vi. Suppose that the price of the firm’s product is now GH¢50.00, how much will the firm produce to maximize profit? How much is total profit? vii. Produce a graph of Total cost, Total fixed cost and Total variable cost (on one graph sheet/excel). viii. Produce a graph of the Average total cost, Average fixed cost, average variable cost, marginal cost (on one graph sheet/excel). ix. Explain the relationship among the total and per unit cost curves.
A computer company produces affordable, easy-to-use home computer systems and has fixed costs of $250. The marginal cost of producing computers is as indicated below. Output Fixed Cost Variable Cost Total Cost Marginal Cost Average Cost Average Variable Cost 1 $250 $700 $950 $700 2 $250 $925 $1175 $225 3 $250 $315 4 $250 $360 5 $250 $400 6 $250 $450 7 $250 $550 If the company sells the computers for $550, is it making a profit or a loss? How big is the profit or loss? If the firm sells the computers for $315, is it making a profit or a loss? How big is the profit or loss? We expect the marginal cost to increase as this firm produces more computers. But when the firm shifts from producing 1 to 2 computers, marginal cost falls. What might explain this?