Gen Combo Microeconomics; Connect Access Card
21st Edition
ISBN: 9781260044874
Author: MCCONNELL CAMP
Publisher: MCG
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Chapter 11, Problem 3P
To determine
Percentage return rate.
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Suppose that the perfectly competitive firm with the costs and revenues shown in the figure to the right is contemplating whether or not to produce 12 units of output. If the firm were to produce the 12th unit and, in doing so, increase its hourly total costs to $68 from $56, what would be its marginal cost? Would producing 12 units maximize the firm's profits? What would be the firm's total revenues per hour? What would be its hourly economic profits? If it were to produce the 12th unit, the firm's marginal cost would be MC = $ nothing per unit. Since the market price is P = $ nothing per unit and this price ▼ is larger than equals is less than the firm's marginal revenue, marginal cost ▼ is less than is larger than equals marginal revenue, and producing the 12th unit ▼ would would not satisfy the profit-maximizing rule. The firm's total revenue would equal $ nothing per hour and economic profits would equal $ nothing per hour. (Enter your responses as whole…
The salmon fishery on Vancouver Island has historically been one of the world’s richest. Over the past few years, poor returns of salmon to the island and competition from farm-raised salmon have reduced the profit realized by the fishermen. One response to lower revenues has been for fishermen to use family members instead of hiring crew “in order to reduce their costs.” What do you think about this business strategy? Will employing relatives really keep profits from falling? Under what conditions will this a good strategy?
A purely competitive wheat farmer can sell any wheat he grows for $10 per bushel. His five acres of land show diminishing returns because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on. Draw a table with multiple columns to help you answer the following questions. How many bushels will each of the farmer’s five acres produce? How much revenue will each acre generate? What are the TR and MR for each acre? If the marginal cost of planting and harvesting an acre is $7,000 per acre for each of the five acres, how many acres should the farmer plant and harvest?
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Gen Combo Microeconomics; Connect Access Card
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- True/False Perfect competitive market situation is almost impossible in real life.arrow_forwardThe Emerald Company, a firm in the perfectly competitive custom jewelry industry, asks you for your expert economic opinion. They tell you the following: Total revenue is $110,000, Total fixed costs are $80,000 Total variable costs are $100,000 Marginal cost is $220/unit Quantity produced is 550 unit What is your advice based upon the information above? Keep operating and do not change the current production level. Keep operating and increase production Keep operating but decrease production Shut-down immediatelyarrow_forwardA purely competitive firm finds that the market price for its product is $25.00. It has a fixed cost of $100.00 and a variable cost of $10.00 per unit for the first 50 units and then $30.00 per unit for all successive units. Instructions: Round your answers to 2 decimal places. a. Does price equal or exceed average variable cost for the first 50 units? (Click to select) No Yes What is the average variable cost for the first 50 units? b. Does price equal or exceed average variable cost for the first 100 units? (Click to select) No Yes What is the average variable cost for the first 100 units? c. What is the marginal cost per unit for the first 50 units? What is the marginal cost for units 51 and higher? d. For each of the first 50 units, does MR exceed MC? (Click to select) No Yes What about for units 51 and higher? (Click to select) No Yes…arrow_forward
- Suppose that the perfectly competitive market for wheat spaghetti is in long-run equilibrium. Suppose also that campaigns for fighting obesity make students on lots of college campuses in the US aware of the fact that excessive pasta (including spaghetti) consumption has an adverse effect on body weight, and these campaigns provide an incentive for students to restrict spaghetti consumption. How do the campaigns described above affect the market for wheat spaghetti in the US, that is does the supply or the demand curve for wheat spaghetti shift and in what direction? How are the equilibrium price and quantity of wheat spaghetti affected in the short run? What happens to the short-run profit of the typical producer of wheat spaghetti in the US? What will be the price of wheat spaghetti in the long run? What profit will producers of wheat spaghetti make in the long run? Explain how this outcome is achieved. Use two graphs: one showing the market supply and demand curves for wheat…arrow_forwardSuppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be Multiple Choice the same as the initial equilibrium price, but the new industry output will be greater than the original output. greater than the initial price, and the new industry output will be greater than the original output. less than the initial price, but the new industry output will be greater than the original output. the same as the initial equilibrium price, and the industry output will remain unchanged.arrow_forwardtrue/false 1- if a perfectly competitive firm shuts down in the short run, its variable cost equals zero. 2- if a perfectly competitive firm shuts dowm in the short run, its total cost equals zero.arrow_forward
- The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit? Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.arrow_forwardMany large corporations, such as General Motors and Apple, operate in markets that are not even close to perfectly competitive. But unlike the products these companies sell, shares of these firms’ common stock are bought and sold in what could be described as a perfectly competitive market. Based on the three conditions that make a market perfectly competitive, what characteristics of the purchase and sale of shares of stock of a large company like GM or Apple, are consistent with perfect competition?arrow_forwardAssume that a firm in a perfectly competitive industry has the following total cost schedule: Calculate a marginal cost and an average cost schedule for the firm to complete the following table. Output Total Cost Marginal Cost Average Cost (units) ($) ($) ($) 10 440 15 600 20 720 25 900 30 1,200 35 1,540 40 1,920 If the prevailing market price is $68 per unit, units will be produced. Profits per unit will be and total profits will be . Is the industry in long-run equilibrium at this price? No Yesarrow_forward
- please answer question 11 and 12 and 13 11- the market price for the product is $29. If company A wants to maximize its profits and sells in a purely competitive market, how many should they produce? 12- using the price given in Q 11, will company A make an economic profit or economic loss? Show your calculation 13- given the economic profit/loss calculate in Q12, will firms enter or leave this industry or is this industry at long run equilibrium? Why?arrow_forwardSuppose that a perfectly competitive firm faces a market price of $12 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output level of 1,800 units. If the firm produces 1,800 units, its average variable costs equal $7.00 per unit, and its average fixed costs equal $1.00 per unit. What is the firm's profit-maximizing (or loss-minimizing) output level? What is the amount of its economic profits (or losses) at this output level?arrow_forwardAssume that prior to the outbreak of the coronavirus (Covid-19), the natural gas industry was in Long Run Equilibrium (LRE). Using our side-by-side graph, depict the market equilibrium P0 and Q0, the optimal output of an individual firm representative of the other firms in the industry at this LRE (labeled as q0), and the individual firm’s profit if any. Provide a brief narrative explaining the setting and the profitability of an individual firm in an LRE (including why there is a certain level of profit in this setting). assume the natural gas industry is perfectly competitive, demand is downward sloping, supply is upward sloping, and production technology results in traditional U-shaped ATC and AVC curves. market price is always greater than the minimum of the AVC curve.arrow_forward
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