Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 21, Problem 14CQ
To determine
Draw a U-shaped
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Draw a graph and complete a short-run cost table by using the information provided.
(TP) (TFC) (AFC) (TVC) (AVC) (ATC) (TC) (MC)
0 $ $ $ $ $ $ $
1 $12
2 $12 $10
3 $12
4 $14
Dylan's house-cleaning enterprise is a competitive firm. Dylan cleans houses for 39 € cach. His total cost ach day is 380€, of which 30€ is a fixed cost.
He cleans 10 houses a day. What can you say about Dvlan's short-run decision regarding shut down and his long-run decision regarding exit.
Draw the MC and the ATC curves and show graphically:
(a) The long-run optimal production and price level.
(b) The economic profits when p >Min(AT C).
(c) The economic profits when p <Min(AT C).
(d) The economic profits when p= Min(AT C).
Chapter 21 Solutions
Economics: Private and Public Choice (MindTap Course List)
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Similar questions
- Make a sketch of Lin’s short-run cost curvesarrow_forwardThe long-run ATC curve is often called the firm’s: a. planning curve. b. capital-expansion path. c. total-product curve. d. production possibilities curve.arrow_forwardGraphically depict the long-run graph for a purely competitive structure. Graphs and explanation required.arrow_forward
- In the short-run, if the marginal cost of a firm in a competitive industry is upward sloping while itsaverage variable cost is downward sloping, what can you say about slope of average total cost?arrow_forwardUsing the Diagram above, answer the following questions: (a) In the short run, what is the fixed cost for this firm? Explain your answer fully.arrow_forwardExplain the influence of costs in the short run on a firm's outputarrow_forward
- Draw the cost curve of the typical firm and identify its profit maximizing rate of output and its total profitsarrow_forwardRead the following news items and explain where a short-run decision and a long-run decision are involved? 1. June 2, 2020: Tim Horton replaces baristas with vending machines. 2. June 30, 2020: Tim Horton is closing 200 stores in British Columbia by the end of Julyarrow_forwardWrite a short note on Law of diminishing returns – implications for the short-run cost curvearrow_forward
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