EBK MICROECONOMICS
21st Edition
ISBN: 8220103960151
Author: McConnell
Publisher: YUZU
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Chapter 12.4, Problem 2QQ
To determine
Accounting profit.
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The formula for calculating marginal revenue is...
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Justin’s Jeans sells in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $33 per unit, and the total fixed cost is $30.(a) Identify the profit-maximizing quantity. Explain using marginal analysis. (b) Calculate the economic profit at the profit-maximizing quantity you identified in part (a). Show your work.(c) Calculate the average fixed cost of producing 6 units. Show your work.(d) Based on your answer to part (b), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain.(e) Based on your answer to part (b), will the market price increase, decrease, or stay the same in the long run? Explain.(f) The income elasticity of demand for Good M is 1.4, and the cross-price elasticity of demand for jeans with respect to the price of Good M is −0.75. Based on your answer to part (e), what will happen to the demand for jeans? Explain.(g) Now assume that the market in which…
Chapter 12 Solutions
EBK MICROECONOMICS
Ch. 12.4 - The MR curve lies below the demand curve in this...Ch. 12.4 - Prob. 2QQCh. 12.4 - Prob. 3QQCh. 12.4 - Prob. 4QQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQ
Ch. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - 10. LAST WORD Using Big Data to set personalized...Ch. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - Prob. 3PCh. 12 - Prob. 4PCh. 12 - Prob. 5P
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Similar questions
- Because of increasing marginal cost, most supply curvesA) are horizontal. B) have a negative slope. C) are vertical. D) have a positive slope.arrow_forwardThe average revenue curve is equal to a. The product's price b. The total revenue curve c. The product's demand function c. The marginal revenue curvearrow_forward14. A shop which sells T- shirts has a demand function and a total cost function given by the equations: P = 240 – 10Q and TC = 120 + 8 Q. a) Write down the equations for TR and Profit. b) Write down equation for MR and MC. c) Calculate the number of T- shirts which must be sold to maximize profit and Revenue.arrow_forward
- Draw the cost curves for a typical firm. For a given price, explain how the firm chooses the level of output that maximizes profit. At that level of output, show on your graph the total revenue of the firm. Show its total costs.arrow_forwardThe following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal revenue curve for a firm for different levels of output. Price R W S L 0 A F B G C M At the profit-maximizing level of output: MC ATC AVC MR Quantity a. the firm is earning economic profit. b. profits per unit are the highest relative to all other output choices. c. profit equals ZC. d. costs exceed revenue.arrow_forwardA firm that has as its objective the maximization of revenues rather than profits would produce an output level for which: Select one: a. marginal revenue is equal to zero b. total revenue is equal to total cost c. marginal revenue is equal to average cost d. marginal revenue is equal to price In the short run, a firm should continue to operate, even if it is incurring losses, provided: Select one: a. the firm can cover its variable costs b. the firm can cover its fixed costs c. none of the above d. the firm can cover the sum of its variable and fixed costsarrow_forward
- 1.) Price: 2.) Quantity: 3.) Total Revenue: 4.) Total Cost: 5.) Total Variable Cost: 6.) Total Fixed Cost: 7.) Profit: 8.) Produce or Shut down: 9.) Draw, shade, and label profit rectangle 10.) Price: 11.) Quantity: 12.) Total Revenue: 13.) Total Cost: 14.) Total Variable Cost: 15.) Total Fixed Cost: 16.) Profit: 17.) Produce or Shut down: 18.) Draw, shade, and label profit rectanglearrow_forwardHigh total revenue does not necessarily mean maximum profit. Explain this statementarrow_forwardPerfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost Refer to the figure above. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, the firm's profit will be: $240 $160 $80 $60arrow_forward
- Using the graph for the questions : A. There are fixed costs of $50 no matter what the output level is. Fill in the fixed cost column B. Fill in the total costs column C. Fill in the marginal costs column D. This is a perfectly compatible firm . The market price for the output they produce is $40/ unit of output. Fill in the marginal revenue column E. Fill in the total revenue column F. Fill in the profit column G. What is the profit maximizing level of outputarrow_forwardA profit-maximizing firm in a competitive market is currently producing 500 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_forwardUse the data below to answer the questions: A. Calculate total revenue at X. B. Calculate marginal revenue at Y. C. Calculate marginal cost at Z.arrow_forward
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