MICROECONOMICS (LL)W/ACCESS >IC<
20th Edition
ISBN: 9781308103341
Author: McConnell
Publisher: MCG/CREATE
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Question
Chapter 12.4, Problem 2QQ
To determine
Accounting profit.
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Perfect Competition
MC - Marginal Cost
MR - Marginal Revenue
ATC - Average Total Cost
AVC - Average Variable Cost
Refer to the figure above. If this firm decides to operate and is producing the profit-maximizing quantity, then the firm's profit will be:
$40
$0
- $40
$240
Perfect 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 total revenue will be:
$240
$90
$60
$180
In the short run , a profit -maximizing firm will produce additional units of a product as long as-
a) price at least covers average fixed cost
b) total revenue is increasing
c) a change in the rate of technical substitution
d) elasticity of demand is infinite
e) price at least covers average variable cost
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- 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_forwardEconomic profit is the difference between total revenue and the A) costs of resources bought in markets.B) normal profit. C) interest costs of production.D) opportunity costs of production.arrow_forwardBavarian Crystal Works designs and produces crystal wine decanters for export to international markets. The marketing manager of Bavarian Crystal Works estimates the demand curve for each month to be: P=1,000-0.0025Q Where Q is the number of wine decanters produced monthly. Bavarian Crystal Works also pays a lease for its factory and equipment every month in the amount of $1,000,000. Finally, the cost to produce each wine decanter is $200. What quantity would maximize profits? What is the optimal price for Bavarian Crystals to charge?arrow_forward
- Perfect 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_forwardA firm's faces a constant output price of $5. It produces 37 units and incurs a MC of $3. Which of the following is true? Select all that apply. A. The firm is perfectly competitive because it faces a horizontal straight line demand curve. B. The firm is perfectly competitive because it faces a horizontal straight line Average Revenue graph. C. The firm's marginal revenue is $5. D. The firm's Total Revenue equals $185. E. The firm's Total Cost equals $111.arrow_forwardWhich of the following statements applies to a purely competitive producer? a. it will not advertise its product b. in long-run equilibrium, it will earn an economic profit c. its product will have a brand name that elicits customer loyalty d. its product is slightly different from those of its competitors [ don't give chatgpt answer]arrow_forward
- Optimal Price. Last week, Wally's Burgers, Inc. reduced the average price on the 1/2-pound Papa burger by 1%. In response, sales jumped by 2%.A. Calculate the point price elasticity of demand for Papa burgers.B. Calculate the optimal price for Papa burgers if marginal cost is $1 per unit.arrow_forwardBecause of increasing marginal cost, most supply curvesA) are horizontal. B) have a negative slope. C) are vertical. D) have a positive slope.arrow_forwardDraw the marginal revenue curve for a firm in perfect competition that produces rubber boots when the market price is $10 per pair. Label it. Draw the marginal cost curve. Label it. Draw the average variable cost curve if the price occurs at minimum average variable cost. Label it. Draw a point to indicate the shutdown point.arrow_forward
- Draw the short-run ATC, AVC, MC, MR and Demand graphs for a perfectly competitive market experiencing a profit. In each part, show Total Cost (TC), Total Revenue (TR), shade the profit. Clearly label Q for the equilibrium quantity point and P for market price point.arrow_forwardRefer to the accompanying figure to answer the following questions 1) the profit maximizing price and quantity are _______, respectively. 2) the total revenue when the firm is profit maximizing is_____. 3)the total cost when the firm is profit maximizing is _____. 4)the profit when the firm is profit maximizing is_____. (Please solve all of the subparts 1 to 4. I am willing to give it a thumbs up Thanks)arrow_forward
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