MICROECONOMICS CONNECT STUDY GUIDE
21st Edition
ISBN: 9781260297287
Author: McConnell
Publisher: MCG
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Question
Chapter 10.3, Problem 3QQ
To determine
Maximization of profit.
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Students have asked these similar questions
What can we say about the Marginal Revenue = marginal Cost relationship:
Multiple Choice
A. This is the point where the firm maximizes its profits.
B. This is the breakeven point for a firm.
C. The firm should shut down if it reaches this point.
D. The firm is inefficient at this point.
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Indicate on the graph the areas that represent Total Revenue, Total Cost, and Profit.a. When P>ATCb. When P<ATCc. When P=ATC
A company has a linear total cost and a linear total revenue, where the slope of the revenue line is greater than the slope of the cost line.
How many of the following will allow the firm to reduce the level of their break-even point?
(i) Increase their selling price
(ii) Increase their output
(iii) Increase their fixed costs
(iv) Decrease variable costs
a.Four
b.One
c.Two
d.Three
e.None
Chapter 10 Solutions
MICROECONOMICS CONNECT STUDY GUIDE
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Similar questions
- How many of the following will occur with a linear total revenue curve? (i) A linear cost curve (ii) A linear profit curve (iii) A single break-even point (iv) Increasing profits as output increases beyond the upper break-even point a.None b.Four c.Three d.One e.Twoarrow_forwardLaura’s cleaning service is a profit-maximising, competitive firm. Laura cleans awhole house for $156. Her total cost each day is $1680, of which $480 is a fixed cost. She cleans 8 houses a day.(a)Should Laura shutdown her business in the short-run, assuming that she cannot recover her fixed cost?(b) Should she exit in the long-run?arrow_forwardPrice equals $20, quality equals 400 units, unit cost equals $15, implicit cost equals $4000. What does economic profit equal?arrow_forward
- At profit maximization, calculate (P-ATC) x Q.arrow_forwardLetters are used to represent the terms used to answer this question: price(P),quantity of output(Q),total cost(TC)and average total cost(ATC).Which of the following equations is equal to a firm's average profit? A. (P −ATC) × Q B. P−ATC C. (P×Q)−TC D. P−TCarrow_forwardNote:Hand written solution is not allowed.arrow_forward
- Price Quantity Total Cost Fixed Cost Variable Cost $10 2000 $24,000 $8000 $16,000 (a) Should this firm shut down in the short run? Explain why or why not in 1-4 sentences. (b) Assume this firm's total costs do not change in the long run. Should this firm exit in the long run? (c) Are your answers to (a) and (b) different?arrow_forwardPrice MC ATC IC MR Quantity a. What area(s) of the graph represent(s) total revenue for this firm if it was profit maximizing? b. What area(s) of the graph represent(s) total cost for this firm if it was profit maximizing? c. What area(s) of the graph represent(s) profits for this firm if it was profit maximizing? d. What area(s) of the graph represent(s) deadweight loss if the firm was profit maximizing?arrow_forwardA profit-maximizing firm in a competitive market is currently producing 500 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b. What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?arrow_forward
- Ball Bearings, Inc., faces costs of production as follows:a. Calculate the company’s average fixed cost, average variable cost, average total cost,and marginal cost at each level of production.b. The price of a case of ball bearings is $50. Seeing that he can’t make a profit, thechief executive officer (CEO) decides to shut down operations. What is the firm’sprofit/loss? Was this a wise decision? Explain.c. Vaguely remembering his introductory economics course, the chief financial officertells the CEO it is better to produce 1 case of ball bearings, because marginal revenueequals marginal cost at that quantity. What is the firm’s profit/loss at that level ofproduction? Was this the best decision? Explainarrow_forward(a) Calculate this firm’s marginal cost for output level 5. (b) Calculate this firm’s marginal cost for output level 6. (c) What is the average total cost at which, this firm reaches its break even-point? (d) What is the average variable cost at which, this firm reaches its shut-down point?arrow_forwardI. A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels: Total revenue = $1,450 Total cost = $1,500 Total variable cost = $1,300 What would you suggest? a. Shut down. b. Continue to produce because the loss is less than the total fixed cost. c. Increase production to lower the marginal cost. e. Raise the price. II. At current long-run production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. If the market is perfectly competitive, the firm should a. cut back on production. b. stop production all together. c. produce more. d. continue producing at current levels.arrow_forward
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