Answered: 1. Assuming that the product’s price is…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Assuming that the product’s price is P58 per pack, should the competitor sell in the short-run
Why or why not?
If it decides to sell, what will be the profit-maximizing (or loss-minimizing output per day)?
What is the profit (or loss) that the seller can realize per day? What is the profit (or loss) per pack?
A. Assuming that the product price is P42 per pack, answer the same questions in letter A.
B. Because of increasing sellers of masks in the market, the product’s price further decreased to P32
per pack. Again, answer the same questions in letter A.
C. When is this seller going to shut down?
D. Now generate the seller’s supply curve of mask in the short run.

I. PROBLEM SOLVING
Below is a data of the per-unit costs incurred by a competitor in selling face mask per pack (5 masks
per pack) per day.
Output
(in packs)
АТC (Р)
MC (Р)
AFC (P)
AVC (P)
1
60.00
45.00
105.00
45.00
2
30.00
20.00
42.50
72.50
40.00
40.00
37.50
37.00
37.50
38.57
40.63
3
60.00
52.50
49.00
47.50
47.14
35.00
30.00
4
15.00
12.00
10.00
35.00
40.00
45.00
8.57
7.50
7
48.13
50.00
8
55.00
6.67
43.33
65.00
10
6.00
46.50
52.50
75.00

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