below cost? That is, explain a rationale of loss leaders, using yourU4. The coconut-milk carts from Exercise S7 set up again the next day. Nearly172[CH. 5] SIMULTANEOUS- MOVE GAMESadollars of a pound of cheese.(a) Initially, L'Épicerie runs La Boulangerie and La Fromagerie as if thewere separate firms, with independent managers who each try tomaximize their own profit. What are the Nash equilibrium quanti-ties, prices, and profits for the two divisions of L'Épicerie, given thenew quantity equations?(b) The owners of L'Épicerie think that they can make more total profitby coordinating the pricing strategies of the two Yuppietown divi-sions of their company. What are the joint-profit-maximizing pricesfor bread and cheese under collusion? What quantities do La Bou-langerie and La Fromagerie sell of each good, and what is the profitthat each division earns separately?(c) In general, why might companies sell some of their goods at pricesbelow cost? That is, explain a rationale of loss leaders, using youranswer from part (b) as an illustration.U4. The coconut-milk carts from Exercise S7 set up again the next day. aximize joint profits in this market? Whyisn't the collusive outcome a Nash equilibrium?U3. Fast forward a decade beyond the situation in Exercise S3. Yuppietown'sU3.demand for bread and cheese has decreased, and the town's two foodowstores, La Boulangerie and La Fromagerie, have been bought out by athird company: L'Épicerie. It still costs $1 to make a loaf of bread and $2to make a pound of cheese, but the quantities of bread and cheese sold(Q and Q, respectively, measured in thousands) are now given by theequations:Q = 8 – P – 0.5P2, Q2 = 16 – 0.5P, – P2.

Given information Q1=8-P1-0.5P2 Q2=16-0.5P1-P2 MC of loaf of bread=$1 MC of pound of Cheese=$2

U3. Fast forward a decade beyond the situation in Exercise S3. Yuppietown's demand for bread and cheese has decreased, and the town's two food stores, La Boulangerie and La Fromagerie, have been bought out by a third company: L'Épicerie. It still costs $1 to make a loaf of bread and $2 to make a pound of cheese, but the quantities of bread and cheese sold (Q and Q2 respectively, measured in thousands) are now given by the equations: Qi = 8 – P1 – 0.5P2, Q2 = 16 – 0.5P; – P2.

U3. Fast forward a decade beyond the situation in Exercise S3. Yuppietown's demand for bread and cheese has decreased, and the town's two food stores, La Boulangerie and La Fromagerie, have been bought out by a third company: L'Épicerie. It still costs $1 to make a loaf of bread and $2 to make a pound of cheese, but the quantities of bread and cheese sold (Q and Q2 respectively, measured in thousands) are now given by the equations: Qi = 8 – P1 – 0.5P2, Q2 = 16 – 0.5P; – P2.

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

What two lines on a cost curve diagram intersect at the zero-profit point?
I need help with econ multiple hw questions asap! 68)Refer to the attachedTable 3.1. If this firm chooses to maximize profit, it will choose a level of output where marginal cost is equal to what dollar amount? A. $8 B. $12 C. $10 D. $6 67) Refer to the attached Figure 19. In which panel is the firm making a loss? A. panel (b) B. panel (a) C. panel (c) D. both panels (b) and (c)
Suppose that each firm in a competitive pizza market has the following identical cost: Total cost: TC=25+1.5Q2 i. Formulate the equation or level of fixed cost, variable cost, marginal cost, average variable cost (AVC) and average total cost (ATC) for each firm. ii. Sketch a diagram to illustrate average total cost (ATC) and marginal cost (MC) for Q from 1 to 20. Identify the quantity at which the average total cost (ATC) reaches its minimum and interpret its economic or business implication. iii. An innovation was diffused widely among all firms in the market. Adoption of this innovation will help to reduce 20% of the variable cost for any given level of production while all other factors remain the same. A firm needs to pay a fee of $5 to adopt the innovation. Formulate the new production cost functions (TC, TFC, TVC, ATC and MC) for each firm.
Suppose that each firm in a competitive pizza market has the following identical cost: Total cost: TC=25+1.5Q2i. Formulate the equation or level of fixed cost, variable cost, marginal cost, average variable cost (AVC) and average total cost (ATC) for each firm.ii. Sketch a diagram to illustrate average total cost (ATC) and marginal cost (MC) for Q from 1 to 20. Identify the quantity at which the average total cost (ATC) reaches its minimum and interpret its economic or business implication.iii. An innovation was diffused widely among all firms in the market. Adoption of this innovation will help to reduce 20% of the variable cost for any given level of production while all other factors remain the same. A firm needs to pay a fee of $5 to adopt the innovation. Formulate the new production cost functions (TC, TFC, TVC, ATC and MC) for each firm.(Suggested word count: 300-350 words)
11. Graph the cost curve below and explain. output (Q) P TFC TVC TC 0 8 50 0 50 10 8 50 100 150 20 8 50 120 170 30 8 50 130 180 40 8 50 135 185 50 8 50 150 200 60 8 50 170 220 70 8 50 195 245 80 8 50 220 270 90 8 50 260 310 100 8 50 310 360 110 8 50 400 450 120 8 50 500 550
In a price-taker market, if a business produces efficiently (i.e., that is, where marginal revenues = marginal costs), the firm will be able to make at least a normal profit. True of False. Explain. All firms produce where MR=MC. Price takers produce and price where P=ATC=MC=MR. That is the "normal profit" level. Profits above that level are considered "economic profits." Review economic profits, normal profits, explicit costs, and implicit costs. Why is 'normal profit' considered to be a cost, in economics?
You are running a chocolate factory and need to decide on the price to sell the chocolate as well as the quantity to produce. Demand curve; Q = 8.5 - 0.05 * P. The cost curve is C = 100 + 38Q. The business is a profit maximizer. 1) What is the best price to charge each week? 2) What is the best quantity to make each week? 3) What are the expected profits Is it possible to get this in an excel with equation formulas
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.
Suppose the imaginary company of Roobek is a small, Reno-based American apparel manufacturer specializing in athleisure. The following table presents the brand’s total cost of production at several different quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 0 120 — — 1 210 2 270 3 315 4 380 5 475 6 630
Q23 Suppose a perfectly competitive firm is currently operating with the following information: Output = 1500 tonnesAverage total cost = $627 per tonneAverage variable cost = $614 per tonneMarginal revenue = $620 per tonneMarginal cost = $620 per tonneAt the current level of output, this firm is _____ profit and is an earning economic profit of _____. a. Maximising; -$10500. b. Not maximising; -$10500. c. Maximising; $10500. d. Maximising; $9000. e. Not maximising; -$9000.
3. Which of the following is NOT an example of a sunk cost? a) Purchase of a hamburger after starting to eat it b) Purchase of a movie ticket thirty minutes after the film has started c) Purchase of an item on Amazon...fifty days after delivery d) Purchase of a gallon of milk after you start drinking it e) Purchase of a new TV set with the receipt 4. Suppose we have another firm known as Sepanyan Corporation which makes a product known as Yeghias. Suppose the firm’s FC=$8,000 and its TC=$10,000 and its AVC=$5. What is the ATC? a) $25.00 b) $67.50 c) $100.25 d) $200 e) Not enough information 5. Which of the following is true concerning a competitive firm? a) It will produce even when its economic profit is zero b) It prefers not to maximize profits c)t is the only firm in the market d) Its quantity choice will affect the market price e) People’s PED for the firm’s specific product is inelastic
Suppose a perfectly competitive firm is operating in short run. The information of MR, Q,ATC and AVC are 15 taka, 60 unit, 45taka and 35 taka respectively. Calculate firm’sprofit/loss and total fixed cost. From these calculations and based on all the giveninformation, can you conclude about the firm’s decision in short run? Explain your reasoningwith the help of a suitable diagram. Show all the relevant information in yourdiagram.[Q=profit maximizing output and MR=marginal revenue]