Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 11, Problem 4DQ
To determine
Productive efficiency and allocative efficiency .
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Linda sells 100 bottles of homemade ketchup for $10 each. The cost of the ingredients, the bottles, and the labels was $700. In addition, it took her 20 hours to make the ketchup and to do so she took time off from a job that paid her $20 per hour. Linda’s accounting profit is while her economic profit is. LO9.1 a. $700; $400 b. $300; $100 c. $300; negative $100 d. $1,000; negative $1,100
Suppose that the pen-making industry is perfectly competitive. Also suppose that each current firm and any potential firms that might enter the industry all have identical cost curves, with minimum ATC = $1.25 per pen. If the market equilibrium price of pens is currently $1.50, what would you expect it to be in the long run? LO11.2 a. $0.25. b. $1.00. c. $1.25. d. $1.50.
A firm sells its product in a perfectly competitive market where other firms charge a price of $110 per unit. The firm estimates its total costs as C(Q) = 70 + 14Q + 2Q2. (LO3) b. What price should the firm charge in the short run? c. What are the firm’s short run profits? d. What adjustments should be anticipated in the long run?
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Economics (Irwin Economics)
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- Quantity Price Total Fixed Costs Variale Cost Total Costs Average Variable Costs Average Total Cost Marginal Cost Total Revenue Marginal Revenue 0 35 25 0 1 35 25 20 2 35 25 25 3 35 25 35 4 35 25 52 5 35 25 80 If this firm produces a quantity of zero units, what is the total profits? What is the firm's marginal cost at a production level of two units? What is the average variable cost at a production level of five units? This firm becomes profitable producing at a quantity of ___ units. The average total cost is smallest at which level of production? At what quantity should this firm produce to maximize their profits based on your calculations? The total costs to produce four units is __________ while the average total cost to produce four units is _________.arrow_forward(Last Word) Starbucks should continue to add stores in a city Multiple Choice a. as long as the marginal benefit of opening a new location does not fall below the marginal cost. b. as long as the marginal cost of opening a new location does not fall below the marginal benefit. c. until all remaining competing coffee stores have left the market. d. as long as the gap between marginal benefits and marginal costs is growing.arrow_forwardCopy and complete the Table. iv. At what level of output does diminishing returns set in, explain your answer thoroughly. v. Suppose that the price of the firm’s product is GH¢30.00, how much will the firm produce to maximize profit? How much is total profit? vi. Suppose that the price of the firm’s product is now GH¢50.00, how much will the firm produce to maximize profit? How much is total profit? vii. Produce a graph of Total cost, Total fixed cost and Total variable cost (on one graph sheet/excel). viii. Produce a graph of the Average total cost, Average fixed cost, average variable cost, marginal cost (on one graph sheet/excel). ix. Explain the relationship among the total and per unit cost curves.arrow_forward
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