Principles of Microeconomics (12th Edition)
12th Edition
ISBN: 9780134081199
Author: CASE
Publisher: PEARSON
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Chapter 9, Problem 1.4P
To determine
The total revenue and total cost.
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Notes for graph: MC is marginal cost, MR is marginal revenue, ATC is average total cost, AVC is average variable cost and D is the demand curve.
To maximize the profit, how many units should the firm produce? At what price?
Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost?
Will you operate this firm in the short run? Long run? Briefly explain.
You are given the following cost data:The total fixed costs are $100.(Photo)If the price of output is $15, how many units of output will this firm produce? What is total revenue? What is total cost? Briefly explain using the concept of marginal cost. What do you think the firm is likely to do in the short run? In the long run?
Select one:a. Profit maximizing Quantity=3b. Profit maximizing Quantity=1c. Profit maximizing Quantity=0d. Profit maximizing Quantity=6
Using the attached graph to answer the following questions:
Notes: MC is marginal cost, MR is marginal revenue, ATC is the average total cost, AVC is the average variable cost, and D is the demand curve.
Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost?
Will you operate this firm in the short run? Long run? Briefly explain.
Chapter 9 Solutions
Principles of Microeconomics (12th Edition)
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Similar questions
- According to the accompanying table, what quantity of output should the firm produce? Explain your answer.arrow_forward"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.arrow_forwardRelated to the Economics in Practice on page 195: If firms have long-run average cost curves with a long, flat section, larger firms have a cost advantage over smaller firms. the optimal number of firms in the industry is one. their long run supply curves are downward sloping. it is impossible to predict the size of the firm.arrow_forward
- Graphically depict a purely competitive firm in the short-run. You can have the firm making a profit or loss in the short-run. Brief explanation and graphs required.arrow_forwardDo fixed costs affect perfectly competitive firm’s output decisions in the short run? Briefly explain your answer. Are there fixed costs in the long run? Do fixed costs affect perfectly competitive firm’s output decisions in the long run? Explain your answers briefly.arrow_forwardSuppose Sophia sells flowers in a perfectly competitive market and always maximizes profit. (a) Given the current market price is $5, Sophia sells 2000 flowers every week and makes zero profit. What are the amounts of marginal revenue, marginal cost and average total cost at this level of output? Briefly explain. (b) Continued from (a), if the market demand decreases, what will be the short-run impact on Sophia’s profit? Explain in detail with diagrams.arrow_forward
- -Briefly discuss average costs, including how they are calculated, how they are typically appear on a graph, and what they relate to profitability. -Briefly explain what is meant by the term "fixed costs" and provide three examples of same. What determines a firm's level of fixed costs? -Briefly explain what is meant by the term "variable costs" and provide three examples of same. -Briefly explain how the total revenue for a profit-seeking firm is determined.arrow_forwardDraw a precise graph that shows the following short-run cost curves: MC and ATC Add the following to your graph from 3: AVC & AFC (pay particular attention to i) the starting points of these curves and ii) how these curve change relative to MC and ATC as output quantity increases). What happens to the difference between ATC and AVC as quantity increases? Why?arrow_forwardA firm sells 1,000 units per week. Suppose the average variable cost is $15, and the average cost is $55. In the short run, the break-even price is:___?_____. . In the long run, the break-even price is . Suppose the firm charges a price of $5 per unit. Use the following table to indicate whether the firm will shut down or continue to produce in the short run and the long run. Time Continue to Produce Shut Down Short Run ? ? Long Run ? ?arrow_forward
- Explain why a company would shut down in the short run.arrow_forwardyou read in a business magazine that the computer firms are reaping high profits. with the theory of perfect competition in mind what do you expect to happen over time? Complete the following sentences to describe the long run adjustment.arrow_forward(1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…arrow_forward
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