1. A profit-maximizing firm you work for is currently producing 2000 units of output per month. The firm can sell all it wants of its product at the market price of $50 per unit. At its current level of production, the firm's marginal costs are $50 per unit and increase as output expands. Total fixed costs are $50,000 per month and monthly total variable costs are $80,000. Your advice to the firm is: A. Maintain the current rate of output in the short run but prepare to leave the industry in the long run. 3. Maintain the current rate of output in the short run and expect to remain in the industry in

1. A profit-maximizing firm you work for is currently producing 2000 units of output per month. The firm can sell all it wants of its product at the market price of $50 per unit. At its current level of production, the firm's marginal costs are $50 per unit and increase as output expands. Total fixed costs are $50,000 per month and monthly total variable costs are $80,000. Your advice to the firm is: A. Maintain the current rate of output in the short run but prepare to leave the industry in the long run. 3. Maintain the current rate of output in the short run and expect to remain in the industry in

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Last year Bill Bailey quit his $20,000 per year job and invested $200,000 to open the Bargain Bonanzas. This year he sold for $600,000 merchandise he bought for $400,000. He paid his sales clerks $50,000. Bill could have earned 10 percent interest on other investments. This year, Bill’s: accounting and economic profit were both $150,000 economic loss was $70,000 economic profit was $110,000 economic profit was $220,000 less than his accounting profit
Problem-3: Consider total cost and total revenue given in the following table. Quantity Total Cost Total Revenue 0 $15 0 1 20 8 2 29 26 3 39 50 4 50 65 5 64 79 6 80 92 7 95 100 Calculate profit, marginal revenue, marginal cost for each quantity? How much should the firm produce to maximise profit?.
Suppose that firm 1 is a restaurant, whose costs are ingredients, staff and space. Ingredients and staff are paid for weekly and staff can be hired or fired at will. The rental for the space is a one year lease, to move out of this space and into a smaller or larger one would take at least one year. Firm 2 is a door-to-door sales firm where the costs are inventory and staff. Both are paid every two weeks, and staff can be fired or fired at will (but must be paid for the current two weeks) while inventory can be bought or sold within a week. Is one month within the “short run” for firm 1? Is one month within the “short run” for firm 2? Explain your answer.
File 5 R24 Undo AKIT 12345678 234 1 14 15 1 67 1 1 1 9 1 10 1 1 11 1 12 1 13 1 1 16 1 1 1 Home Insert Draw Page Layout Formulas 1 1 Paste Clipboard N MOTN B L 0 1 2 3 4 5 6 7 8 9 10 11 12 13 17 18 19 20 21 22 Fixed Costs = 23 24 25 14 15 16 17 18 OPOLEEEEE X ✓ fx C D TP MPP 0 12 26 41 55 68 Arial 80 91 101 110 118 125 131 136 BIU 140 143 145 146 146 V ✓10 Font E FC V V F VLC A^ A Data Review View Automate Help IN G VMC Alignment H TVC TC 7 General $ V J AFC % 9 Number $5K interest and principle, insurance and property tax + $1 K Lawyer's retainer + $2K Government Regulation compliance manager + $1K HR/diversity compliance manager + $2.5K accountant + $3K principal's opportunity cost ←.0 .00 K AVTC →.0 5 Conditional Format as Formatting Table ✓ Styles ATC M MC Cell Styles N * Insert Delete Format Cells V P 图M Σ AT Sort & Find & Filter Select ✓ Editing R Comments Analyze Data Analysis = S Share T Column A: K = units of capital Column B: L = Column C: TP = Column D: MPP = Marginal…
Table Cost.EX2: Costs and Outputs for a Competitive Firm Total Total Output Fixed Variable (Q) Costs (TFC) Costs (TVC) $30.00 $0.00 3. $30.00 $40.00 6. $30.00 $90.00 9. $30.00 $130.00 12 $30.00 $190.00 15 $30.00 $260.00 Refer to Table Cost.EX2. For the 6 units, the average total cost is about O $20.00 O $16.67 O $5.00 $15.00
Table Cost.EX2: Costs and Outputs for a Competitive Firm Total Total Output Fixed Variable (Q) Costs (TFC) Costs (TVC) $40.00 $0.00 $40.00 $40.00 4 $40.00 $90.00 9. $40.00 $130.00 8. $40.00 $190.00 10 $40.00 $260.00 Refer to Table Cost.EX2. For 8 units, the average total cost is about O $23.75 O $26.75 O $30.00 $28.75
37 Total Total Average Average Output Fixed Variable Total Variable Total Marginal (Q) Cost Cost Cost Cost Cost Cost E of 150 $500 $400 $900 $2.67 200 $500 $800 $1,300 $6.50 The table above shows costs for a firm. When Q = 150, Average Total Cost (ATC) is equal to: Select one: а. $3.33 b. $900 c. $6.00 d. $2.67
4. A firm in a purely competitive industry is currently producing 1,500 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $310, and if it produced 500 units per day, its total cost would be $175. a. What are the firm's ATC at these three levels of production? i. At 1,500 units per day, ATC = $. ii. At 1,000 units per day, ATC = $. III. At 500 units per day, ATC = $. b. If all firms have the same cost structure, what is the highest possible price per unit that could exist as the market price in long-run equilibrium?
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Question 11 11.1. Revenue is the same as profit. Do you agree with this statement? Justify your answer. 11.2. Using your knowledge of cost formulas and calculations for a firm producing in the short-run, redraw the table below in your answer book and complete the table by filling in the blank spaces. [Tip: Answers should be rounded off by two decimals]. (5) Total Average Variable Cost Average Total Cost (ATC) Total Total Cost Average Fixed Fixed Cost Marginal Cost (MC) Variable Quantity Cost Cost (TFC) (TVC) (TC) (AFC) (AVC) 80 80 1 80 12 80 12 2 80 28 40 14 54 3 34 114 26.67 38 6. 4 80 39 119 20 9.75 29.75 80 42 122 16 8.4 24.4 80 128 13.33 8 21.33 7 80 56 136 11.43 8 8 80 61 141 10 7.63 17.63 9 80 68 148 7.56 16.44 10 80 157 8 7.7 15.7 9. 11.3. Suppose a firm producing coffee provides you with the following information: Price = R100 Quantity = 150 units of coffee Cost of production = R9500 11.3.1. Calculate the total revenue of the firm. 11.3.2. Is the firm currently making a profit…
True or False