1. Šunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost (Units) ($) 50 10 120 20 170 30 210 40 260 50 330 60 430 Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit. (a) Prepare (i) marginal cost and (ii) average total cost schedules for the firm. (b) What is the firm' s profit maximizing output level? (c) Is the industry in long-run equilibrium? Justify your

1. Šunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost (Units) ($) 50 10 120 20 170 30 210 40 260 50 330 60 430 Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit. (a) Prepare (i) marginal cost and (ii) average total cost schedules for the firm. (b) What is the firm' s profit maximizing output level? (c) Is the industry in long-run equilibrium? Justify your

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter11: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 14CQ

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ntQu102spring22 (1) - Protected View • Saved to this PC - O Search (Alt+Q) Faridatu Pafadnam References Mailings Review View Help t Defender Advanced Threat Protection and it hasn't detected any threats. If you need to edit this file, click enable editing, Enable Editing 3) Consider the following short-run cost curves for a profit-maximizing firm in a perfectly competitive industry. MC SRATC 4 SRAVC 1.5 1 100 200 300 400 Quantity FIGURE 1 a) Refer to Figure 1. If the current market price is $6, what is the profit-maximizing output for this firm? b) Refer to Figure 1. If the price is $6 and the firm is producing at its profit-maximizing output, then what are total costs for the firm? c) Refer to Figure 1. If the market price is $1, the firm will produce short run. units of output in the d) Refer to Figure 1. If the market price is $2, what the firm will do? Price $
2AAWO AC I4 17.1 REVENUE, COST, AND PROFIT APPLICATIONSITSO RSYHAHD 797 20 A firm sells each unit of a product for $50. The total cost of producing x (thousand) units is described by the function C(x) = 10 – 2.5x² + x³ where C(x) is measured in thousands of dollars. (a) Use the marginal approach to determine the profit-maximizing level of output. (6) What is total revenue at this level of output? Total cost? Total profit? 1 The profit function for a firm is -000
Q3_A The Break even Analysis of firm show that: BEP = 1000 FC = 10,000 $ P = 3% of the quantity of zero profit. A) The point of intersection of TR with TC is at the cost point of $ 45,000 for TR. B) At the point where (zero units sold) TC equals $ 5,000 C) the start of the line drawing for TR is at cost point $ 0 D) the value UVC for the product in question equals $ 10) E)the FC value in a point for BFP equals $ 10,000 For the given choices, showing which one is True and which one is False, correcting the False ones and given a reasonable reason for the True. Write your answer below:
Q9 ABC is a small business producing instructional modules for disabled children in public schools. The modules produced by ABC are not differentiated and the market price is $1,300 per module. ABC operates in a small office that rents for $600 a month and leases computer equipment that costs $480 per month. The chart lists other cost of production. Output (Q) Fixed (Instructional Cost Modules Per month) 0 1 2 3 4 5 6 7 8 9 10 Variable Total Average Average Cost Cost Fixed Variable (TC) Cost (AFC) (FC) (VC) 1,080 400 1,350 1,900 2,500 4,100 5,400 7,300 1,480 2,430 4,280 10,880 216 135 Cost (AVC) 475 Average Total Cost (ATC) 965 Marginal Cost (MC) 400 450 700 1) Complete the chart and plot the following graphs: AFC, AVC, ATV, MC. Be sure to label axis and graphs. 2) How many instructional modules ABC will produce, assuming it is profit- maximizer? Explain your answer and show that on the graph. 3) Determine ABC's profit and shade the profit on the graph. 4) Given the level of ABC's…
1. Consider a firm with the following cost and inverse demand functions. Cost($) 20 3 Cost Function N 3 quantity Price($) 16 13 30 10 Inverse Demand quantity (a) What are the average costs of producing 1, 2, and 3 units for this firm? (b) What are the marginal costs of producing first, second, and third units for this firm? (c) Does this firm enjoy either economies or diseconomies of scale? (d) What are the profits of producing 1, 2, and 3 units for this firm? (e) When does the firm maximize its profit? Select from producing 1, 2, and 3 units.
The diagram shows the price, marginal cost and average cost curves facing a perfectly competitive firm in the short run. What is the total revenue of the profit maximising firm in the short run? a) R720 b) R800 c) R960 d) R2 000 20 2 Cost, price (Rand) MC I 100 60 80 Output per day AC AVC Price
7. An analyst has found that Tom's Transmissions Company cost function is: C(x) = 40,000 + 500x – 0.55x² for, where x is the number of transmissions. a) Determine the marginal Cost function C'(x). b) Determine when the Cost function is maximized. c) Determine the marginal cost function at the 100th item proe Explain significance of the marginal cost at this point. ed and sold. d) Determine the cost difference between 101st and 100th boat ( C(101) - C(100)). Is this value the same or different from the marginal cost from part c? Explain.
1. Mariel runs an ice cream shop. Her short-run cost is given by 300 + is the number of ice cream cones she sells per day. + 3q where q 3000 (a) Find mathematical expressions for Mariel's marginal cost, average variable cost, and average total cost. (b) Sketch' Mariel's marginal cost, average variable cost, and average total cost. (c) Suppose the market price for ice cream cones is $3. How many ice cream cones will Mariel supply? What will her profits be? Identify your answers on the diagram and then compute the values mathematically. (d) Find the minimum market price such that Mariel will stay in business in the short-run, both on your diagram and mathematically. (e) Assume that Mariel can only run an ice cream shop of this size and in the long run must decide whether to operate or not. (In other words, assume that Mariel's LRAC curve is her short-run average total cost curve.) Identify the minimum market price such that Mariel will stay in business in the long-run on your diagram.…
1. Suppose the total cost to a firm of producing a quantity q of some commodity is C(q)- 490+ 20g +0. lq² dollars. a) Find the corresponding marginal cost (MC(q) and average cost (4C(9) b) Find the minimum average cost and the output level at which it is achieved i c) Verify that MC(q) AC(q) at this output level you found in section "b)"
The figure shows a bakery's marginal and average cost curves, and its isoprofit curves. The bakery is a price-taker in a large bread market. Suppose the current market price is P₁. Based on this information, which of the following statements is correct? Price, Cost €6 (5 20 40 60 80 Quantity MC hoprofits AC 100 120 140 160 180 number of loaves Select one or more: a. The bakery would be better off raising its price up to its AC level. O b. The bakery would be minimising its loss at A. Oc. If the bakery is not yet in the market then it would not enter the market. d. If the bakery is already in the market, then it would always immediately exit the market because it is making a loss.
QUESTION 9 John lives in the small island nation of Vanuatu, and is a producer in the perfectly competitive market for galip nuts. A summary of some of his costs, which are given in the local currency (the "vatu"), is shown below. Quantity (kg of galip nuts) 0 30 60 90 120 150 Total Fixed Cost TFC (vatu) 5600 5600 5600 5600 5600 5600 Total Variable Cost TVC (vatu) 0 640 1520 2640 4800 9120 If John's profit-maximising quantity is 90kg of galip nuts, what is the marginal revenue per kilogram of galip nuts at this profit maximising quantity? Answer to the nearest whole number.
6. A firm manufactures and markets a product that sells for Birr 20 per unit. Fixed costs associated with activity total Birr 40,000 a month, while variable cost per unit is Birr 10. A maximum of 10,000 units can be produced and sold. Required: a) Drive the TR, TC and Total profit functions. b) Sketch the TR, TC and Total profit functions in the same coordinate system. c) What is the Break-even point (in terms of quantity and sales volume)? d) Drives the new TC, Total profit functions given that FC is increased by Birr 10,000 a month, and calculate the new break-even point. e) Drive the new TC and Total profit functions given that unit variable costs is decreased by 20% and calculate the new Break-even point. f) Drive the new TR and Total profits functions given that the unit selling price increases by 20% and calculate the new break-even point. g) What is the relationship that you may inter from BEP& FC, P& BEP and V& BEP? h) Assume selling prince increases by 10%…