Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
20th Edition
ISBN: 9780077660819
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 10.6, Problem 3QQ
To determine
Normal profit.
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Assume a competitive firm faces a market price of $120, a cost curve of:
C = 13q3 + 20q + 500,
and a marginal cost of:
MC = q2 +20.
What is the firm's profit maximizing output level?
?? Units (round your answer to two decimal places)
What is the firm's profit maximizing price?
??? (round to the nearest penny)
What is the firm's profit?
??? (round to the nearest npenny)
In the short-run, this firm should ??
produce or shut down??
4. The cost function for a firm facing perfect competition isC(q)=1000+25q-0.5q²+0.01q^3What is the minimum price at which this firm will produce q> 0 in the short run? Show your work.
Q1:
Underer the assumption of perfect competition in short run firms only earn abnormal profit. True/False. Explain your answer theoretically and graphically.
Chapter 10 Solutions
Microeconomics: Principles, Problems, & Policies (McGraw-Hill Series in Economics)
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- (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_forwardA competitive firm has the short-run cost function C(y) = 12y3−8y2+30y+12. At what price will the firm agree to produce in the short run? What is the shutdown condition for this firm? Show all working and explanation.arrow_forwardIn perfect competition marginal cost curve of a firm shows supply curve of the firm in short run. True/False. Elaborate your answer theoreticallya andgraphically.arrow_forward
- The attached figure shows the short-run cost curves for a perfectly competitive firm. If the price of the product were $8, and the firm does not close, the firm's short-run output will be:a. 0 (zero)b. between 0 (zero) and 10c. 10 or mored. Cannot be determined unless more information is available.Please elaborate on your answer to each alternative, whether it is true, false or uncertain.arrow_forwardQuestion 12 (i) Monica can go to work today and earn $500. However, she is also thinking about studying for the English test. If she studies for the English test she will not be able to go to work. What is Monica’s opportunity cost of studying for the English test? A: $0 B: $500 C: $500 minus the benefit from studying for the test D: The benefit of studying for the test minus $500 (ii) Which of the following is(are) considered as sunk cost for a competitive firm in the short-run? Variable cost Fixed cost A: 1 only B: 2 only C: Both 1 and 2 D: Neither 1 nor 2arrow_forwardIn the short run, a perfectly competitive firm's economic profits Question 7 options: must be negative, that is the firm must incur an economic loss. might be positive, negative (an economic loss), or zero (a normal profit). must be positive. must equal zero, that is, the firm earns a normal profit.arrow_forward
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