MYECONLAB+ETEXT+KNAPP 104 STUDENT PACKET
6th Edition
ISBN: 9781323477816
Author: HUBBARD/KNAPP
Publisher: PEARSON C
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Question
Chapter 13, Problem 13.3.6PA
Subpart (a):
To determine
Profit maximizing output level, economic profit and long run sale.
Subpart (b):
To determine
Profit maximizing output level, economic profit and long run sale.
Subpart (c):
To determine
Profit maximizing output level, economic profit and long run sale.
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Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. For each level of output, calculate total revenue, marginal revenue, average cost, marginal cost, and profits. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits?
Price
Quantity
TC
MC
AC
TR
MR
Profit
$25.00
0
$130
---
---
$24.00
10
$275
$23.00
20
$435
$22.50
30
$610
$22.00
40
$800
$21.60
50
$1,005
$21.20
60
$1,225
Briefly explain in (2-3 sentences) why a firm may choose to stay open in the short run even if their economic profit is below zero.
Souvlaki Taverna is one of many restaurants in Athens, Greece which sell Souvlaki kebabs. All restaurants make the dish slightly differently. Use the following graph showing the demand (D), marginal revenue (MR), average variable cost (AVC), average total cost (ATC) and marginal cost (MC) curves of Souvlaki Taverna to answer the questions below.
(a). The goal of Souvlaki Taverna is to maximize its profit. How many Souvlaki kebabs per day should it make? What price per kebab (in euros) should it charge?
If Souvlaki Taverna maximizes its profit, how much is its total revenue? What about its total costs? What is its daily profit? What would the profit-maximizing output level of this business be if it operated in a perfectly competitive market instead? What price per kebab would it charge?
Does the economic outcome in part (a) imply allocative efficiency? Why or why not? Does the economic outcome in part (a) imply productive efficiency? Why or why not?
Chapter 13 Solutions
MYECONLAB+ETEXT+KNAPP 104 STUDENT PACKET
Ch. 13 - Prob. 13.1.1RQCh. 13 - Prob. 13.1.2RQCh. 13 - Prob. 13.1.3RQCh. 13 - Prob. 13.1.4PACh. 13 - Prob. 13.1.5PACh. 13 - Prob. 13.1.6PACh. 13 - Prob. 13.1.7PACh. 13 - Prob. 13.1.8PACh. 13 - Prob. 13.1.9PACh. 13 - Prob. 13.1.10PA
Ch. 13 - Prob. 13.2.1RQCh. 13 - Prob. 13.2.2RQCh. 13 - Prob. 13.2.3RQCh. 13 - Prob. 13.2.4PACh. 13 - Prob. 13.2.5PACh. 13 - Prob. 13.2.6PACh. 13 - Prob. 13.2.7PACh. 13 - Prob. 13.2.8PACh. 13 - Prob. 13.2.9PACh. 13 - Prob. 13.3.1RQCh. 13 - Prob. 13.3.2RQCh. 13 - Prob. 13.3.3RQCh. 13 - Prob. 13.3.4RQCh. 13 - Prob. 13.3.5PACh. 13 - Prob. 13.3.6PACh. 13 - Prob. 13.3.7PACh. 13 - Prob. 13.3.8PACh. 13 - Prob. 13.3.9PACh. 13 - Prob. 13.3.10PACh. 13 - Prob. 13.3.11PACh. 13 - Prob. 13.3.12PACh. 13 - Prob. 13.4.1RQCh. 13 - Prob. 13.4.2RQCh. 13 - Prob. 13.4.3RQCh. 13 - Prob. 13.4.4RQCh. 13 - Prob. 13.4.5PACh. 13 - Prob. 13.4.6PACh. 13 - Prob. 13.4.7PACh. 13 - Prob. 13.4.8PACh. 13 - Prob. 13.4.9PACh. 13 - Prob. 13.5.1RQCh. 13 - Prob. 13.5.2RQCh. 13 - Prob. 13.5.3PACh. 13 - Prob. 13.5.4PACh. 13 - Prob. 13.5.5PACh. 13 - Prob. 13.5.6PACh. 13 - Prob. 13.5.7PACh. 13 - Prob. 13.6.1RQCh. 13 - Prob. 13.6.2RQCh. 13 - Prob. 13.6.3PACh. 13 - Prob. 13.6.4PACh. 13 - Prob. 13.6.5PACh. 13 - Prob. 13.6.6PA
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