Microeconomics with Connect Access Card
20th Edition
ISBN: 9781259278556
Author: Campbell McConnell
Publisher: McGraw-Hill Education
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Chapter 11.6, Problem 2QQ
To determine
Profit maximizing output.
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How much should the firm produce to maximize its profit?
What is the firms AR?
What is the firms MR?
How much is the firms total revenue based on the profit maximization rule?
How much is the firms total cost?
How much is the firms total profit?
Show all the work clear handwriting
Suppose the market price of a good is $20 and TC=0.5Q2.
A. What Q should a profit maximizing perfectly competitive firm choose?
B. What are profits?
C. Draw a graph that shows the short run choice of Q, revenue and profits.
(a)Identify this firm's profit-maximizing rate of output.
(b) how many frisbees are being sold?
(c) how many (identical) firms are initially produces frisbees?
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Microeconomics with Connect Access Card
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- 5. Restaurants offer related but differentiated products to their consumers. In the long run, new restaurants enter the market and imitate the cuisine and atmosphere of successful competitors. How would you expect a restaurant to set its prices in the long run? Describe the relationship between price and average total cost. Does a restaurant earn economic profits?arrow_forwardA. What is the profit-maximizing price and quantity? B. What is the revenue-maximizing price and quantity? C. When total cost exceeds total revenue, profits are?arrow_forwardDoug's Donut Shop operates in a competitive market and is currently producing 200 donuts. He has average revenue of $1.50, his average total cost is $1, and his total fixed costs are $30. Does Doug have profits or losses?Select one:a. losses of $300.b. losses of $100.c. profits of $200.d. profits of $100.arrow_forward
- Refer to the diagram below to answer the questions. 7.Find the profit-maximizing level of output and price for the high school yearbooks. How much is the profit? Working calculation and answer:arrow_forwardQ2. Ramzah owned a burger stands along the beach. Figure 2 shows Ramzah’s cost curves. Figure 2: Market for Burger (a) What is Perfect Competition? (b) If the market price of a burger is $4, what is Ramzah’s profit-maximizing output? (c) Calculate the economic profit that Ramzah’s makes. (d) With no change in demand or technology, how will the price change in the long run? (e) Distinguish between technological efficiency and economic efficiency.arrow_forwardTrue or false b. Charging a price greater than marginal cost leads to maximum efficiency c. In reality, few markets are perfectly competitive, and some loss of economic efficiency occurs in most markets d. Most markets are perfectly competitive and economists have found that there is no loss of economic efficiency in the U.S. economy.arrow_forward
- At what price and output total revenue is maximized?arrow_forwardMust complete chart and graph MR, MC, ATC, AVC, and where Q indicates max profit. FOR CHART, FIND: Mid-point AVG Quantity Total Revenue (pxQ) Fixed costs calculations Variable costs (wages x workers) Total Costs (TC) Total Profit (TR-TC) AVC (VC/Q) ATC (TC/Q) Marginal Revenue (MR) (change in TR/ change in Q) Marginal Cost (MC) (change TC/ change in Q) Change in profit (MR-MC)arrow_forwardExplain the difference between a firm's revenue and its profit. Which do firms maximize?arrow_forward
- Question 1 A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b. What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?arrow_forwardi. Calculate the marginal cost, marginal revenue and profit for each unit of production. ii. How many units should the firm produce to maximise profit?arrow_forwardThinking on the Margin to Increase Profitability Have you ever walked into a restaurant for lunch and found it almost empty? Why, you might ask, does the restaurant even bother to stay open? It might seem that the revenue from so few customers could possible cover the cost of running the restaurant. Provide an opinion using the concepts of sunk costs, marginal cost and marginal revenue.arrow_forward
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