Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Question
Chapter 8, Problem 5TY
To determine
Average Revenue, Average Cost and Profit.
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Students have asked these similar questions
Delvin has a hot dog stand in a busy midtown area with similar stands on every block. The graph above shows the cost curves of Delvin’s Hot Dogs. The market price of a hot dog is $3. Answer the questions below and show all calculations where necessary.
From the diagram, what is Delvin’s profit-maximizing output per day? Explain your answer.
Calculate Delvin’s accounting profit per day.
How will Delvin’s price and profit change in the long-run, assuming no change in technology or demand?
p= 130 - 2Q.
The firm's cost curve is
C(Q) = 20 + 6Q.
What is the profit-maximizing solution?
The profit-maximizing quantity is O. (Round your answer to two decimal places.)
The profit-maximizing price is $. (round your answer to two decimal places.)
What is the firm's economic profit?
The firm earns a profit of $]. (round your answer to two decimal places.)
How does your answer change if C(Q) = 100 + 6Q? The increase in fixed cost
O A. causes the firm to increase both the price and quantity, and profit increases.
O B. has no effect on the equilibrium price and quantity, but profit will decrease.
OC. has no effect on the equilibrium quantity, but the equilibrium price increases and profit increases.
OD. has no effect on the equilibrium quantity, but the equilibrium price increases and profit decreases.
If Hasan runs the restaurant himself and before setting up this
business, he was working in a company as a salesman for $15,000
per year. Hasan owns the building that his restaurant in housed in
and could have rented it out for $10,000 per year. Those would be
an implicit cost of opening his own restaurant. Calculate the
economic profit?
Chapter 8 Solutions
Economics: Principles and Policy (MindTap Course List)
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