Principles of Microeconomics - With Access (Custom)
20th Edition
ISBN: 9781259890048
Author: McConnell
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?
Chapter 11 Solutions
Principles of Microeconomics - With Access (Custom)
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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
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