20АТC1612AVCMC+++41216202428323640QUANTITY OF OUTPUT (Air fresheners)In the short run, at a market price of $20 per air freshener, this firm will choose to produce 18air fresheners per day.On the previous graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $20 andthe firm chooses to produce the quantity you already selected.Note: In the following question, you should enter a positive number in the numeric entry field.The area of this rectangle indicates that the firm'swould be $per day.PRICE AND COST (Dollar Suppose that the market for air fresheners is a perfectly competitive market. The following graph shows the daily cost curves of a firm operating inthis market.(?4036Profit or Loss322824АТС1612AVCMC4481216202428323640QUANTITY OF OUTPUT (Air fresheners)PRICE AND COST (Dollars per air freshener)20

Perfectly competitive market structure in which there are large number of buyers and selling…

uppose that the maket for air fresheners is a perectly competitive market. The following graph shows the dally cost ves of a firm oper is market. 40 36 Profit or Loss 32 28 24 20 ATC 16 12 AVC 8 MC 4 4 12 16 20 24 28 32 36 40 QUANTITY OF OUTPUT (Air fresheners) COST (Dollars per freshener) PRICE

uppose that the maket for air fresheners is a perectly competitive market. The following graph shows the dally cost ves of a firm oper is market. 40 36 Profit or Loss 32 28 24 20 ATC 16 12 AVC 8 MC 4 4 12 16 20 24 28 32 36 40 QUANTITY OF OUTPUT (Air fresheners) COST (Dollars per freshener) PRICE

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter11: Profit Maximization

Section: Chapter Questions

Problem 11.1P

See similar textbooks

Similar questions

A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new process lowers the firm’saverage cost, meaning that this firm alone (although still aprice taker) can earn real economic profits in the long run. a. If the market price is $20 per widget and the firm’s marginalcost is given by MC=0.4q , where q is the dailywidget production for the firm, how many widgets willthe firm produce? b. Suppose a government study has found that the firm’snew process is polluting the air and estimates the socialmarginal cost of widget production by this firm to be. If the market price is still $20, what is thesocially optimal level of production for the firm? Whatshould be the rate of a government-imposed excise tax tobring about this optimal level of production? c. Graph your results.
Consider the perfectly competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost ( MCMC ), average total cost ( ATCATC ), and average variable cost ( AVCAVC ) curves shown on the following graph
Suppose that the market for microwave ovens is a competitive market. The following graph shows the daily cost curves of a firm operating in this market.
Consider the competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. The following diagram shows the market demand for titanium. Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. If there were 20 firms in this market, the short-run equilibrium price of titanium would be $_______ per pound. At that price, firms in this…
After serving as President of the United States for eight years, Dena has retired from politics and has decided to become a wheat farmer. The market for wheat is perfectly competitive and the current market price for wheat is $10 per bushel. Dena is currently producing 8 bushels (Dena can only produce this good in whole units). Her total cost at 8 units of output is $88 and her variable cost at 8 units of output is $64. Dena knows that if she produces a 9th unit her total cost will become $97, and if she produces a 10th unit her total cost will become $110. Dena’s goal is to maximize her profits. Based on this information, identify whether each of the following would be true or false and briefly explain your reasoning. Dena is currently losing money in the short-run and she would be better off if she shutdown and produced zero. Dena is not currently profit maximizing at 8 units of output and she could increase her profits if she expanded output by one unit. Dena would increase her…
Suppose that you are one of rubber producers (sellers) in the perfectly competitive market in Thailand. Make it simple: suppose there are two types of used inputs consisting of land and workers. Assume that, in short-run production, you operate on a fixed size of a land and the cost of renting the land is 2 Baht per day. The table (A) below shows the relationship between the quantity of rubber produced by your company per day and costs of workers per day. The goal of your firm is to maximize (minimize) profits (losses).Table (A) The Quantity of rubber (units) produced per day Costs of workers per day in baht ATC AVC MC 0 0 1 5 2 9 3 12 4 14 5 15 6 18 7 22 8 27 9 33 10 40 Answer the following questions 1. Filling in Table (A) above for ATC, AVC and MC from 0 to 10 units. 2. Using economics analysis, suppose the market price of the rubber in Thailand is 3.5 Baht per unit, how…
What is the firm's profit from both markets? Please provide a numerical answers in billions of dollars. For example, if the answer is 7,850,000,000 (7 billion and 850 million dollars), put 7.85 in the answer field.
Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MCMC), average total cost (ATCATC), and average variable cost (AVCAVC) curves shown on the following graph. The following diagram shows the market demand for steel. Use the orange points (square symbol) to plot the short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. If there were 20 firms in this market, the short-run equilibrium price of steel would be per ton. At that price, firms in this…
Suppose you are the economic advisor of Jackie Brown Company, a perfectly competitivecompany that is suffering economic losses due to unforeseen continuous drop in the market price.Jackie Brown is a price taker; hence it cannot influence the market price, nor could it changeproduction technology in the short run. You are asked to decide whether the company should shutdown its operations or to continue to operate at a loss. Jackie Brown is selling 50 units of outputper day, at a price of $20 per unit. The cost of raw material, direct labor, energy, and othervariable inputs is about $24000 monthly. Unfortunately, an estimate of Jackie Brown fixed costs iscurrently unavailable. So, what is your decision?
A textile firm in a competitive industry employs a particularly efficient manager torun the operations at its production facility. In the textile industry, a plant managertypically makes a salary of $4,500 per month. The textile firm employing thesuperior manager faces the LAC and LMC curves shown in the figure below. Inlong-run competitive equilibrium, the price of the product is $9 A- typical textile firm in this competitive industry has a minimum long-runaverage cost of $______. The typical textile firm earns economic profit of$______ B-The textile firm with the superior plant manager could earn economic profitof $___________ per month, if no rent is paid to the superior manager C-The superior plant manager is likely to earn a salary of $______ per month,$____________ of which is economic rent
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 a small family farm sold its output for $100,000 in a given year. The family spent $25,000 on fuel, $40,000 on seed, fertilizer, and pesticides, and $25,000 on equipment, including maintenance. The family members could have earned $20,000 working at other occupations What is the accounting profit for the family farm?