Pearson eText Microeconomics -- Access Card
2nd Edition
ISBN: 9780136849513
Author: Acemoglu, Daron, Laibson, David, List, John
Publisher: PEARSON
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Question
Chapter 14, Problem 11P
To determine
HH-Index for the industry.
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The blue curve on the following graph represents the demand curve facing a firm that can set its own prices.
Use the graph input tool to help you answer the following questions. You will not be scored on any changes you make to this graph.
Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.
PRICE (Dollars per unit)
100
TOTAL REVENUE (Dollars)
90
80
20
10
0
1250
1125
1000
875
750
625
500
On the previous graph, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 10,
20, 25, 30, 40, or 50 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green
points (triangle symbol) to plot the results.
375
250
125 +
0
0
0
Demand
5 10 15 20 25 30 35 40 45 50
QUANTITY (Units)
+
5
20
10 15
25 30 35
QUANTITY (Number of units)
40
Graph Input Tool
Market for Goods
45 50
Quantity
Demanded
(Units)…
Using the graph answer the following questions:
A: At the profit maximizing level of output, what is the firm's total revenue?
B: At the profit maximizing quantity, what is the firm's total cost?
C: At the profit maximizing quantity, what is the firm's profit?
D: Assuming that most firms in the industry have similar costs, describe what happens in this market to bring the industry to a long-run equilibrium (where there are zero profits).
Chapter 14 Solutions
Pearson eText Microeconomics -- Access Card
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- The graph presents the costs and revenue for a purely Cost and revenue competitive firm, where the market price is equal to $400 per unit of output. Use this information to determine the profit-maximizing output and profit for this firm. $800 (13,800) 750 700 Marginal cost 650 What is the profit-maximizing output of this purely 600 Average total cost (12,600) competitive firm? Round the answer to the nearest 550 whole number. 500 (4,500) (6,450) (12,450), 450 (10,400) 400 Marginal revenue (9,350) 350 profit maximizing output = units of output 300 (6,250) 250 Average variable cost (4,200) 200 What is the profit for the purely competitive firm that 150 |(1,150) produces at the output level in the first question. Round the 100 answer to the nearest whole number. 50 1 2 3 4 7 8 9 10 11 12 13 14 15 Units of output profit = $|arrow_forwardOn the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.arrow_forwardSuppose that the seitan industry is initially operating in long-run equilibrium at a price level of $5 per pound of seitan and quantity of 175 million pounds per year. Suppose a top medical journal publishes research that animal-alternative protein sources such as seitan could increase your expected lifespan by 5 years. The publication is expected to cause consumers to demand (less/more) seitan at every price. In the short run, firms will respond by ( attached image). Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the publication In the long run, some firms will respond by (attached image) until (consumer demand returns to original level, each firm in the industry is once again earning zero profit, seitan populations grow large enough to support more firms, new technologies are discovered that lower costs) Now Shift the demand curve, the supply curve, or both on another graph (same as the first) to illustrate both…arrow_forward
- The coffee industry is comprised of many firms producing an identical product. Market demand and supply conditions are indicated in the left-hand panel of the figure below; the long-run cost curves of a representative coffee farmer are shown in the right-hand Currently, the market price for coffee is $2 per pound, and at that price consumers are purchasing 800,000 pounds of coffee per day. Using the graphs shown in the images find:a. How many pounds of coffee will each farmer produce if they want to maximize profits?b. How many farmers are currently serving the industry (fractional numbers are fine)?c. In the long run, what will the equilibrium price of coffee be? Briefly explain your answer.arrow_forwardThe curves show the marginal revenue (MR), marginal cost (MC), and average total cost (ATC) functions for a firm in a competitive market. Use the area tool to draw the area representing the maximum profit the firm could earn—that is, the profit the firm would earn if it produced the optimal quantity.arrow_forwardProblem Set #2 (Note: On this problem, use EXCEL to generate numbers. Please replace the below table with your answers ON THIS SHEET. Similarly, in the rest of the assignment use EXCEL and insert figures and tables from EXCEL onto this sheet. 1. Consider the total profit function π = TR (31-Q)Q = TC (20+Q+2Q²) Create a table that shows Total Revenue, Total Cost and Total Profit, (in your table, let quantity run from 0 to 10 in increments of 1.) Indicate in where total profits are maximized your tablearrow_forward
- Just the bolded one please Using the above graph, The minimum level of output this firm would produce is 12 units. The firm's total fixed costs is $56. (Do NOT enter the '$' in your response; enter only the whole dollar amount, NOT cents.) The profit maximizing output level for this firm is 14 units. The economic profit that this firm is earning is $Blank 4. (Do NOT enter the '$' in your response; enter only the whole dollar amount, NOT cents.) If this profit level is typical of the industry that the firm is operating in, what do you expect to happen? Blank 5arrow_forwardThe following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps.arrow_forwardBlue INK is the only cabel service provider in Gazipur. The diagram below depicts the price, output and costs incurred by Blue INK. Use the graph to answer the following questions: What is the Total revenue generated by Blue INK at the profit maximizing level of output?[ Answer in Numerical value only.i;e. 1,2,3,4,5] If the Cable Service Market turns into a Perfectly Competitive Market, what will be the total ammount of the service provided? [ Answer in Numerical value only] If the market turns into a Monopoly market again, what will be the total deadweight loss created? [ Answer in Numerical value only]arrow_forward
- Economics Questionarrow_forwardWhich of the following is a true statement about the difference between a price-taker firm and a competitive price-searcher firm in the long run (more than one answer is correct)? Both will sell their products at a price equal to average total cost, but only the price-searcher will produce at minimum average total cost. Both will sell their products at a price equal to marginal cost, and only the competitive price searcher will produce at minimum average total cost. Only the price searcher will sell its product at a price equal to marginal cost. Only the competitive price taker will sell its product at a price equal to marginal cost. Both will sell their products at a price equal to average total cost, but only the price-taker will produce at minimum average total cost.arrow_forwardQ.No.2: Consider total cost and total revenue given in the following table: Quantity 2 4 5 Total cost 8 10 11 13 19 27 37 Total Revenue 8. 16 24 32 40 48 56 1. Calculate profit for each quantity. How much should the firm produce to maximize profit? II. Calculate marginal revenue and marginal cost for each quantity. Graph them. (Hint: Put the points between whole numbers. For example, the marginal cost between 2 and 3 should be graphed at 2.5) At what quantity do these curves cross? How does this relate to your answer to part (a)? III.Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?arrow_forward
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