EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Chapter 15, Problem 6IAPA
To determine
The output level, economic profit and the number of firms in long run to be determined.
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Students have asked these similar questions
The figure below shows the demand and costs facing Mike's Bikes, a producer of
mountain bikes. What quantity does the firm produce and what is its price? Calculate
the firm's economic profit or economic loss.
Price and cost (dollars per bike)
400
350
300
250
200
150
100
50
MC
ATC
MR
100
200
Quantity (mountain bikes per week)
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$200 per bike, and economic loss is $10,000.
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$250 per bike, and economic loss is $5,000.
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$200 per bike, and economic profit is $5,000.
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$250 per bike, and economic profit is $5,000.
3. Johnny Rockabilly has just finished recording his latest CD. His record company's marketing department determines that the demand for the CD is as follows:
Price Number of CDs
$24
10 000
22
20 000
20
20
30 000
18
40 000
16
50 000
14
60 000
The company can produce the CD with no fixed cost and a variable cost of $5 per CD.
a. Find total revenue for quantity equal to 10 000, 20 000, and so on. What is the marginal revenue for each 10 000 increase in the quantity sold?
b. What quantity of CDs would maximize profit? What would be the price? What would be the profit?
c. If you were Johnny's agent, what recording fee would you advise Johnny to demand from the record company? Why?
The situation facing by firm "Smart", a producer of running shoes, is shown in the
following figure.
100
MC
ATC
80
60
40
20
MR
50
100
150
200
Quantity (pairs of running shoes per week)
a. What quantity does Smart Shoes produce?
Answer:
b. What is the price of a pair of Smart shoes?
Answer:
c. What is Smart's economic profit or economic loss?
Answer:
Why MR curve is below to demand curve
Price and cost (dollars per pair)
8
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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