Foundations of Economics, Student Value Edition (8th Edition)
8th Edition
ISBN: 9780134489230
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 15, Problem 5MCQ
To determine
The correct option in case of the short run profit maximizing firm is to be determined.
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How much should the firm produce to maximize its profit?
What is the firms AR?
What is the firms MR?
How much is the firms total revenue based on the profit maximization rule?
How much is the firms total cost?
How much is the firms total profit?
Q2. Ramzah owned a burger stands along the beach. Figure 2 shows Ramzah’s cost curves.
Figure 2: Market for Burger
(a) What is Perfect Competition?
(b) If the market price of a burger is $4, what is Ramzah’s profit-maximizing output? (c) Calculate the economic profit that Ramzah’s makes.
(d) With no change in demand or technology, how will the price change in the long run?
(e) Distinguish between technological efficiency and economic efficiency.
Use Table A below and calculate ATC, Profit, marginal revenue and marginal cost at each quantity of output - keep your calculation for follow up questions:
Q
P
TR
TC
ATC
Profit
MR
MC
0
$1,900
$0
$1,000
1
$1,700
$1,700
$2,000
2
$1,650
$3,300
$2,800
3
$1,600
$4,800
$3,500
4
$1,550
$6,200
$4,000
5
$1,500
$7,500
$4,500
6
$1,450
$8,700
$5,200
7
$1,400
$9,800
$6,000
8
$1,350
$10,800
$7,000
9
$1,300
$11,700
$9,000
a.
Q
P
TR
TC
ATC
Profit
MR
MC
0
$1,900
$0
$1,000
$0
-$1000
$0
$0
1
$1,700
$1,700
$2,000
$2,000
-$300
$1,700
$1,000
2
$1,650
$3,300
$2,800
$1,400
$500
$1,600
$800
3
$1,600
$4,800
$3,500
$1,166.66
$1,300…
Chapter 15 Solutions
Foundations of Economics, Student Value Edition (8th Edition)
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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Similar questions
- Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.arrow_forwardUse Table A below and calculate ATC, Profit, marginal revenue and marginal cost at each quantity of output - keep your calculation for follow up questions: Q P TR TC ATC Profit MR MC 0 $1,900 $0 $1,000 1 $1,700 $1,700 $2,000 2 $1,650 $3,300 $2,800 3 $1,600 $4,800 $3,500 4 $1,550 $6,200 $4,000 5 $1,500 $7,500 $4,500 6 $1,450 $8,700 $5,200 7 $1,400 $9,800 $6,000 8 $1,350 $10,800 $7,000 9 $1,300 $11,700 $9,000 a. Q P TR TC ATC Profit MR MC 0 $1,900 $0 $1,000 $0 -$1000 $0 $0 1 $1,700 $1,700 $2,000 $2,000 -$300 $1,700 $1,000 2 $1,650 $3,300 $2,800 $1,400 $500 $1,600 $800 3 $1,600 $4,800 $3,500 $1,166.66 $1,300…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
- A. Very briefly, what is the significance of where marginal cost equals marginal revenue? B. When total revenue exceeds total cost, profits are? C. Is this firm earning an economic profit if it is operating at the profit-maximizing/loss minimizing output? (Yes or No) D. Below what price level would the firm shut-down?arrow_forward(Figure: Pineapples) Refer to the figure. What is their total profit or loss? $360,000 $840,000 –$400,000 –$200,000arrow_forwardDon't use chatgpt or any AI A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?arrow_forward
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- Lisa lawn company (LLC) is a lawn mowing business in a perfectly competitive market for lawn moving services. The following tables set out Lisa's costs Quantity(lawn per hour) Total Cost(dollars per lawn) 0 $30 1 $40 2 $55 3 $75 4 $100 5 $130 6 $165 A. If the market price is $30 per lawn, How many lawns per hour does Lisa's LLC now? B. If the market price is 30 per lawn, What is Lisa"s profit in the short run? C. if the market price falls to $20 per lawn, how many lawns per hour does Lisa's LLC now? D. if the market price falls to $20 per lawn, what is Lisa's profit in the short run? E. At What market price will Lisa shut down?arrow_forwarda. A firm operating in a perfectly competitive market is earning K20 million economic profits. What is the firms accounting profits if the opportunity cost is K30 millionb. What will be the firm’s economic profits in the long run? c. Company ‘A’ has been recording accounting profits averaging K50 million by investing in project C. It could earn K60 million and K70 million in projects D and E, respectively. What is the company’s current economic profit? d. Advise management what to do in the long run e. Project ‘B’ has a net present value of zero after applying a discount rate of 10%, which is the risk adjusted required rate of return that takes into account the riskiness of the project. What return is earned on this project f. After a risk assessment, it is discovered that project ‘B’ has become more risky and the risk adjusted required return to use must be 12%. Will the net present value of project ‘B’ still remain zero?arrow_forward(a)Identify this firm's profit-maximizing rate of output. (b) how many frisbees are being sold? (c) how many (identical) firms are initially produces frisbees?arrow_forward
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