EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Chapter 15, Problem 4MCQ
To determine
The correct option in case of Firm's shutdown is to be determined.
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Your firm has a price of $5, an average total cost of $7, and an average variable cost of $4. Inthe short run, you should__________ (operate/shut down) because ________exceeds___________. Inthe long run, you should ___________(stay in/exit) the market because________ exceeds___________.
Calculate the total revenue if the firm produces 10 versus 9 units. Then, calculate the marginal revenue of the 10th unit produced.
The marginal revenue of the 10th unit produced is________.
Calculate the total revenue if the firm produces 20 versus 19 units. Then, calculate the marginal revenue of the 20th unit produced.
The marginal revenue of the 20th unit produced is_________.
Calculate the total revenue if the firm produces 4 versus 3 units. Then, calculate the marginal revenue of the fourth unit produced.
The marginal revenue of the fourth unit produced is________.
Calculate the total revenue if the firm produces 8 versus 7 units. Then, calculate the marginal revenue of the eighth unit produced.
The marginal revenue of the eighth unit produced is________.
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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- I. A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels: Total revenue = $1,450 Total cost = $1,500 Total variable cost = $1,300 What would you suggest? a. Shut down. b. Continue to produce because the loss is less than the total fixed cost. c. Increase production to lower the marginal cost. e. Raise the price. II. At current long-run production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. If the market is perfectly competitive, the firm should a. cut back on production. b. stop production all together. c. produce more. d. continue producing at current levels.arrow_forwardThe table provides data on a market demand schedule (top two rows) and a firm's average and marginal cost schedules (bottom four rows). 1. What is the firm's shutdown point? A firm will stop producing an output in the short run when the market price of the good is _________. A. below minimum AVC B. equals ATC C. below minimum ATC D. equals MC This firm's shutdown point is at a market price of $ ? per unit and its profit-maximizing output is ? units.arrow_forwardIf a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm _____.arrow_forward
- The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 per cent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________. Select one: A. increases; zero; price of apples will return to its original level B. increases; zero; orchards will be replanted and economic profit will return to zero C. increases; positive; orchards will be replanted and economic profit will return to zero D. remains the same; zero; orchards will be replanted and growers will make normal profitsarrow_forward11. Madibaz is a company that produces t-shirts. The firm operates in a highly competitive, industry and each t-shirt is priced at R80. Madibaz's marketing manager wants to determine the possible total profit for the year given the price and costs of production. The total cost equation is TC=25000 +0.025Q where Q is the number of t-shirts per year. Calculate Madibaz's total profit.arrow_forwardA perfectly competitive firm would produce______________________________________if it wanted to maximize its profit: Answers: A. the output where MC equals price, the marginal revenue B. the output where the ATC curve is at a minimum C. as much output as it is able to produce D. the output where the marginal cost curve is at a minimumarrow_forward
- If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm _____. Question 15 options: a must decrease output to increase profit b must increase output to increase profit c is maximizing profit d must shut-down to increase profitarrow_forwardCase D: Apex Company. Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit. Quantity (units) 0 1 2 3 4 5 6 7 8 9 10 Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250 Answer the following questions: What is the profit-maximizing level of output? Calculate Apex’s profit. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case? Comment on your answers to parts (2) and (3).arrow_forwardi. Calculate the marginal cost, marginal revenue and profit for each unit of production. ii. How many units should the firm produce to maximise profit?arrow_forward
- An enterprise has annual fixed costs of $375,000 and a variable cost of $4 per unit of product. The product is sold for $75.a. Calculate how many units he must produce to break even.Round to the next whole numberb. A change in the market increases its fixed costs by $3,000 and reduces its selling price by 20%. What is the new break-even quantity?arrow_forwardPls don't use AI solution Consider a firm operating in a competitive market. The firm is producing 50 units of output, has an average total cost of production equal to 7 dirhams, and is earning 350 dirhams economic profit in the short run. What is the current market price?.arrow_forward1) Given the following cost and revenue schedule, find the profit-maximizing quantity. Calculate total profits, average cost and average revenue.. Quantity 0 10 20 30 40 50 60 70 Total Cost 400 500 625 775 950 1150 1375 1625 Total Revenue 0 600 900 1150 1350 1500 1600 1650 2) Plot the total revenue curve, total cost curve. 3) Given the cost and revenue schedule above, find the profit-maximizing quantity. Calculate the marginal cost and marginal revenue." 4) Plot the marginal cost curve and marginal cost curve. Apply the profit maximizing rule in the short-run. (arrow_forward
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