### Understanding Short-Run Production and Profit Maximization**Graph Explanation:**The graph depicts three important curves in microeconomics related to firm production and costs:1. **ATC (Average Total Cost)** - The green curve shows the average total cost per watch. This curve typically has a U-shape, indicating that initially, spreading fixed costs over more units decreases the per-unit cost, but eventually, variable costs increase the average total cost.2. **AVC (Average Variable Cost)** - The purple curve represents the average variable cost per watch, which usually follows a similar U-shape due to initially increasing and then diminishing marginal returns.3. **MC (Marginal Cost)** - The orange curve indicates the marginal cost, which often cuts through the lowest points of the ATC and AVC curves. It represents the additional cost of producing one more watch.**Axes:**- **Y-axis:** Price (Dollars per watch)- **X-axis:** Quantity (Thousands of watches per day)#### Decision-Making for Profit or LossIn the short run, at a market price of $45 per watch, a firm must decide how many watches to produce:- **Selection:** The firm will choose the quantity where the market price intersects the marginal cost (MC) curve, as this is the point of profit maximization or minimal loss in the short run.#### Instruction for Analysis- **Task:** On the graph, use the provided tool to outline the area that reflects potential profit or loss, considering the market price of $45 and the determined production quantity.**Note:** Even if it indicates a loss, enter the value as a positive number. - **Calculate Area:** The area you shade corresponds to the firm's profit or loss per day in the short run, represented in thousands of dollars.This practical exercise helps visualize how firms determine optimal production levels under varying market prices and cost structures. **4. Profit Maximization in the Cost-Curve Diagram**Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. *Hint*: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point.**Graph Explanation:**- **Axes:** - **X-axis:** Quantity (Thousands of watches per day) - **Y-axis:** Price (Dollars per watch)- **Curves:** - **MC (Marginal Cost):** Orange curve - **AVC (Average Variable Cost):** Purple curve - **ATC (Average Total Cost):** Green curve**Task:**In the short run, at a market price of $45 per watch, this firm will choose to produce ___ watches per day.On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm’s profit or loss if the market price is $45 and...

In the short run at the market price $45/watch then the firm will choose to produce 45 unit of…

100 90 80 Profit or Loss 70 60 50 40 АТС 20 MC AVC 10 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of watches per day) In the short run, at a market price of $45 per watch, this firm will choose to produce ▼ watches per day. On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $45 an the firm chooses to produce the quantity you already selected. Note: In the following question, enter a positive number, even if it represents a loss PRICE (Dollars per watch)

100 90 80 Profit or Loss 70 60 50 40 АТС 20 MC AVC 10 10 20 30 40 50 60 70 80 90 100 QUANTITY (Thousands of watches per day) In the short run, at a market price of $45 per watch, this firm will choose to produce ▼ watches per day. On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $45 an the firm chooses to produce the quantity you already selected. Note: In the following question, enter a positive number, even if it represents a loss PRICE (Dollars per watch)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

①The total cost for producing x items is given by 12x + 3735. Each item is sold for $21. Find the formula for the total items must be sold to break even? revenue. How Many ②Solve the equation x² - 10x = -2x-15 3 A department store will buy 8 items if the price is $40 per item, and 14 items if the price is $28 per item. The Supplier is willing to sell 5 items if the price is $70 per item and 12 items if the price is $140 per item. If the supply and demand functions are linear, find the equilibrium point. invest $10,000 in an account that pays 10% compounded you continuously, how much money will you have in 15 years? (4) If ⑤ het f(x) = 300 √x + 2. Find the average rate of change when x increases from 25 to 100. Calculate derivatives of the following functions. a) 2 2x-3 4x+5 b) (2x5 +1) 9 ⑦Calculate derivatives of the following functions 8 の 2 6x в) че 6) 1) In (3x² + 5x) Calculate the following integral S (8x7 - 12x 5 + 3x² + 4) dx
Que 1
3. Profit maximization using total cost and total revenue curves Suppose Bob runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Bob's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Bob produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 O ☐ ☐ 0 1 2 3 4 5 QUANTITY (Teddy bears) ☐ 6 Total Cost 7 8 O Total Revenue Profit ?
Costs and Profit Maximization: Work It Out 1 Suppose Margie decides to lease a photocopier and open up a black-and-white photocopying service in her dorm room for use by faculty and students. Her total cost, as a function of the number of copies she produces per month, is given in the table. Number of Photocopies Per Month Total Cost Fixed Cost Variable Cost Total Revenue Profit 0 $100 1,000 $110 2,000 $125 3,000 $145 4,000 $175 5,000 $215 6,000 $285 a. Fill in the missing numbers in the table, assuming that Margie can charge 6 cents per black-and-white copy. Margie's fixed cost is: $ Variable cost, 0 photocopies/month: $ Variable cost, 1,000 photocopies/month: $ Variable cost, 2,000 photocopies/month: $ Variable cost, 3,000 photocopies/month: $ Variable cost, 4,000 photocopies/month: $…
IAN GE Student Resources - Faculty Resources - Academic Resources - Ime grupiI Delow IIUIUUES two piunt Sizes us musuuteu uy ACr UnU ACZ. AC1 AC2 AC1 AC2 LRAC Q1 02 Output per time period Refer to the graph above to answer this question. Which of the following statements is correct if a firm is operating at point a on AC1? Select one: O a. The firm is achieving MES. O b. Building a larger plant would result in lower long-run average cost. O c. Building a larger plant would not result in lower long-run average cost. od. The firm has achieved capacity output. O e. An increase in the output would not lower costs. Clear my choice Staut o gao
Calculate Kenji's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. ? 30 8 COSTS AND REVENUE (Dollars per shirt) 25 15 O 10 0 0 1 2 5 QUANTITY (Shirts) 3 4 6 Kenji's profit is maximized when he produces 7 8 would maximize his profit) is $ which is maximizing quantity corresponds to the intersection of the last condition can also be written as Marginal Revenue shirts. When he does this, the marginal cost of the last shirt he produces is $ which is than the price Kenji receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Kenji receives for each shirt he sells. Therefore, Kenji's profit- curves. Because Kenji is a price taker, this Marginal Cost
How can I answer H and I with the information given?
Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 90 70 60 ATC 40 30 20 AVC 10 + ++++ 10 15 20 3 30 35 o 5 QUANTITY (Thousands of jackets) 50 For each price in the following table, use the graph to determine the number ofr jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 10 20 32 COSTS (Dollars)
Where is the marginal cost curve on the graph?
Bob produces Blu-ray movies for sale, which requires a building and a machine that copies the original movie onto a Blu-ray. Bob rents a building for $60 per month and this is his fixed costs. His variable cost per month is given in the accompanying table. Quantity of Blu-rays Variable Cost 10 200 20 380 30 540 40 720 50 920 60 1140 70 1380 80 1640 Assume that Bob can only ptoduce the quantity listed in the table. Assume current market price is $21, what's Bob's profit? O 70 130 Need more information to tell.
please use following information that has been filled out to fill out next 2 graphs.
Attempts: Average: 12 5. Profit maximization and shutting down in the short run Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. V ATC AVC PRICE (Dolars per watch) 100 5 MO 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY(Thousands of watches) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) Price Quantity (Dollars per watch) (Watches) 25.00 40.00 65.00 Total Revenue Fixed Cost Variable Cost (Dollars) (Dollars) (Dollars) 520,000 $20,000 520,000 (Dollars) If the firm shuts down,…