EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Chapter 15, Problem 10IAPA
To determine
To explain:
The fall in soybean prices in 2015 and the change in soybean farmer's economic profit
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(J) Canadian red wheat is a normal good, in a perfectly competitive market which is in long run equilibrium. There occurs a boon in the economy and income rises. What effect does this have on short run equilibrium price and equilibrium quantity? Draw a short run industry graph showing the change described above. Remember to label every curve, label your axes, and demonstrate the resulting changes in the axes.
14. Profit maximization and shutting down in the short run
The following graph plots daily cost curves for a firm operating in the competitive market for fitness trackers.
PRICE (Dollars per tracker)
8888888
20
10
ATC
MC
AVC
10
20
30 40
50 GO 70 00
90
100
QUANTITY (Thousands of tracker)
Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to
determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent
between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average
variable cost information.)
Price
(Dollars per tracker)
Quantity
(Trackers)
Total Revenue
(Dollars)
Fixed Cost
(Dollars)
Variable Cost
(Dollars)
Profit
(Dollars)
25.00
520,000
40.00
65.00
520,000
520,000
If the firm shuts down, it must incur its fixed costs (FC) in…
explain your answers in detail and use graphs
whenever appropriate:
The market for rental cars is very competitive.
How would the following developments affect
the quantity of car rentals that a typical rental
car company wants to supply in the short run?
a. With the easing of fears about Covid 19,
people are more excited to travel than before.
b. Local governments reduce the yearly fee
that rental car companies have to pay for their
facilities. Note, these fees do not vary with how
many cars the company rents.
c. Rental car companies have to pay higher
wages for their workers.
Suppose that initially the market for rental cars
is in long-run equilibrium.
a. What does the fall in the yearly fee rental
car companies have to pay for their facilities
do to the profits of a typical rental car
company in the short run?
b. What will happen to the equilibrium price
and quantity of rental cars in the long run?
Why? What will happen to the profits of a
typical rental car company in the long run?
Chapter 15 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 15 - Prob. 1SPPACh. 15 - Prob. 2SPPACh. 15 - Prob. 3SPPACh. 15 - Prob. 4SPPACh. 15 - Prob. 5SPPACh. 15 - Prob. 6SPPACh. 15 - Prob. 7SPPACh. 15 - Prob. 8SPPACh. 15 - Prob. 9SPPACh. 15 - Prob. 10SPPA
Ch. 15 - Prob. 11SPPACh. 15 - Prob. 1IAPACh. 15 - Prob. 2IAPACh. 15 - Prob. 3IAPACh. 15 - Prob. 4IAPACh. 15 - Prob. 5IAPACh. 15 - Prob. 6IAPACh. 15 - Prob. 7IAPACh. 15 - Prob. 8IAPACh. 15 - Prob. 9IAPACh. 15 - Prob. 10IAPACh. 15 - Prob. 11IAPACh. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Prob. 3MCQCh. 15 - Prob. 4MCQCh. 15 - Prob. 5MCQCh. 15 - Prob. 6MCQCh. 15 - Prob. 7MCQCh. 15 - Prob. 8MCQ
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