ECO 2301 PRIN MICROECO W/MYECONLAB >I
3rd Edition
ISBN: 9781323504406
Author: CASE
Publisher: PEARSON C
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Question
Chapter 8, Problem 2.7P
To determine
The marginal cost curve and the profit maximizing level of output.
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Chapter 8 Solutions
ECO 2301 PRIN MICROECO W/MYECONLAB >I
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- The graph shows the Cost curves for a profit maximizing firm in a competitive market. If the market price is $30 and the firm produces at the profit maximum quantity, what is the amount of the total fix costarrow_forwardJack scalps lawns in the neighborhood for $36 per house. He does ten houses per day. He is incurring total costs of $400 per day, of which $100 is fixed. The marginal cost per house is constant. (i) What is the value of the marginal cost associated with scalping the lawn of one house? (ii) What are profits equal to at the profit-maximizing level of output?.arrow_forwardConsider the table below that describes the costs associated with producing a good (Q). Q Total Variable Cost Total Cost 0 0 30 1 30 60 2 50 80 3 65 95 4 77 107 5 87 117 6 100 130 7 120 150 8 160 190 9 220 250 10 300 330 What is the value of the marginal cost of producing the second unit? Enter your answer as a number below. Do not include a "$" sign.arrow_forward
- Explain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is on the rise. People often believe that large firms in an industry have cost advantages over small firms in the same industry. For example, they might think a big oil company has a cost advantage over a small oil company. For this to be true, what condition must exist? Explain your answer.arrow_forwardWith the aid of a diagram, explain the relationship between ‘marginal cost’ and ‘average total cost’ With the aid of a diagram, explain the relationship between ‘marginal cost curve’, ‘supply curve’ and the ‘average variable cost curvearrow_forwardHow many of the following statements are true? (i) Maximising profit involves maximising Revenue (ii) Maximising profit involves maximising output (iii) Maximising profit involves minimising variable costs (iv) Maximising profit involves producing at the quantity where marginal profit is zero. a.Three b.One c.None d.Two e.Fourarrow_forward
- For the pizza seller whose marginal, average variable, and average total cost curves are shown in the graph below, what is the profit-maximizing level of output and how much profit will this producer earn if the price of pizza is $1.50 per slice?Instructions: In the graph below, label all three curves by clicking on the dropdown to select the appropriate label. Instructions: Enter your response as a whole number. If you are entering a negative number, be sure to include a negative sign (−). When the price is $1.50 per slice, the profit-maximizing level of output is slices per day. Instructions: Enter your response rounded to the nearest penny (two decimal places). At the profit-maximizing level of output, the producer's profit is: $ per day.arrow_forwardExplain the following quotations; 1. " Greater production is not tantamount to greater profit"2. "Higher selling price does not equate to higher profit"arrow_forwardFor the pizza seller whose marginal, average variable, and average total cost curves are shown in the graph below, what is the profit-maximizing level of output and how much profit will this producer earn if the price of pizza is $1.00 per slice?arrow_forward
- The marginal cost of producing the third unit of output isarrow_forwardThe curves show the marginal revenue (MR), marginal cost (MC), and average total cost (ATC) functions for a firm in a competitive market. Use the area tool to draw the area representing the maximum profit the firm could earn—that is, the profit the firm would earn if it produced the optimal quantity.arrow_forwardEnter your answer as a whole number. If you are entering a negative number include a minus sign. a. To maximize its profits, the firm should produce units and charge a price of $ . b. At the profit-maximizing level of output, average total cost per unit is $ . c. At its profit-maximizing level, profits are $ .arrow_forward
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