LSC CUMBERLAND EC202 MICRO>PKG<
21st Edition
ISBN: 9781260586992
Author: McConnell
Publisher: MCG
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Chapter 10.6, Problem 3QQ
To determine
Normal profit.
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Students have asked these similar questions
At a firm's profit-maximizing level of output, its price is $200 and its short-run average total cost is $225. The firm
a has a profit of $25 per unit of output.
b. should shut down if its short-run average variable cost is more than $200.
Oc should remain in business in the long run if these conditions are expected to continue.
d. should shut down if its short-run average variable cost exceeds $25.
If the price that a firm with no market power receives is $10,
its minimum AVC is $8 and its minimum ATC is $15 then
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
a. the firm will make a loss and shut down immediately
b. the firm can make a profit
c. it will make a loss and choose to continue to produce in the short run
d. the firm enjoys increasing returns to scale.
e. None of the above.
Currently the firm is producing at a profit maximizing quantity of output and has a total revenue of $5000. Variable costs are $4000 and Fixed costs are $2000. Which of the following is true for this firm in the short run:
A.
The firm should continue producing at a loss
B.
The firm should shut down immediately
C.
The firm should continue to produce since it is making profit
D.
The firm should adjust (increase or decrease) output
Chapter 10 Solutions
LSC CUMBERLAND EC202 MICRO>PKG<
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- Case D: Apex Company. Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit. Quantity (units) 0 1 2 3 4 5 6 7 8 9 10 Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250 Answer the following questions: What is the profit-maximizing level of output? Calculate Apex’s profit. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? Comment on your answers to parts (2) and (3).arrow_forwardIn a short-term perfectly competitive market, profit-maximizing company A's marginal cost is 50, average variable cost is 45, and average total cost is 55 under the current production level. When the market price is 50, which of the following statements is correct? A. The company is experiencing losses. B. The company should shut down. C. Total variable cost can be covered by total revenue. D. Sunk cost is higher than total variable cost О А, С О А, В, С ○ A, C, D ○ B, D ○ B, C, Darrow_forwardDon't use chatgpt, I will 5 upvotes Refer to Figure 14-1. If the market price is P2, in the short run, the perfectly competitive firm will earn ◻ positive economic profits. negative economic profits but will try to remain open. zero economic profits. negative economic profits and will shut down.arrow_forward
- Please no written by hand solutions 9. A firm produces a product in a perfectly competitive industry and has a short-run total cost function of SRTC= 50+ 4q+2q. In the short-run, the market equilibrium price is $20 and the firm's profit maximizing quantity is_ Assuming there is no change in cost structure, in the long-run the equilibrium price changes to a. 4; $24 b. 4:$15 c. 5; $24 d. 5:$15 10. The market for sugar consists of 3,500 identical firms, each with the following short-run total cost function: SRTC-1,500+ 35q. The market demand curve for sugar is Q=11,200- 30P. What is each firm's short-run profit? a. So b. $280 c. -$1,080 d. -$1,360 e. -$1,500arrow_forward8 Price and Cost (dollars) 4 6 S 3 N - 0 60 50 30 I Refer to the graph above. The perfectly competitive, profit-maximizing firm will produce units of output. 70 MC 10 ATC 10 20 30 40 50 60 70 80 Quantity -darrow_forwardWhen total fixed costs increase, a - the profit - maximizing level of output falls. b the firm may be forced to shut down if total fixed costs get too high. c economic profit decreases. d all of the above occurs.arrow_forward
- If the market price is at point B and the firm shown to the right is producing at point B, it A. earning an economic profit. B. just breaking even. C. at the shutdown point. earning a short-run economic loss. Using the rectangle drawing tool, draw and label a rectangle that shows the firm's profit or loss. Note: Carefully follow the instructions above and only draw the required object. Cost per unit ($) 9.00 8.00- 7.00- 6.00- 5.00 4.00 3.00 2.00 1.00 0.00+ A 2 B Units of output MC ATC AVC o o 13arrow_forward0 1 2 3 4 5 Problem 1. Fill out the missing data. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Total Cost - Average Variable Cost 7 10 37 22.5 10.50 15 The market price for the firm's output is $14.50. a) What quantity will the firm produce? Q = b) What is the firm's profit? Profit= P = P = c) What is the breakeven price? d) What is the shutdown price? f) Are consumers or producers affected by the tax more? Explain.arrow_forwardB) Consider a perfectly competitive firm with the following short-run total costs: SRTC = b + j q x. The corresponding short-run marginal cost is given by:SRMC = xj q x-1. 1. If the market price is n, how much output (q) will the firm produce? What will thefirm’s profits are at a price of n? 2. Find the quantity of output for which marginal cost equals average variable cost.What does this information tell you about this firm’s decision about whether toshut down in the short run rather than produce a positive quantity of output?arrow_forward
- The table below shows cost and revenue information for Choco Lovers, a purely competitive firm producing different quantities of chocolate gift boxes. Fill in the blanks in the table. Instructions: Enter your answers rounded to two decimal places. Quantity of Gift Boxes 20 25 30 35 40 45 b. Total revenue = Choco Lovers Cost and Revenue TC ($) ATC ($) 5.75 5.50 5.42 c. Profit = $ 227.50 d. Profit per unit = $ 115.00 137.50 162.50 192.50 232.50 282.50 Assume the profit-maximizing price is $8 per gift box, and then answer the following questions: a. Profit-maximizing quantity = 35 gift boxes 12 5.81 6.28 MC ($) per gift box 5.00 4.50 5.00 6.00 8.00 10.00arrow_forwardThe profit maximizing output level for this firm is A. 0. B. 25. C. 40. D. 70. E. somewhere between 40 and 70.arrow_forwardQ5. Typical perfectly competitive firm with Total Cost Function TC 200 + 25Q - 6Q + (1/3)Q' , faces price of $70. Determine the profit-maximizing output and the amount of its short-run profits or losses.arrow_forward
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