1. Price and output in a competitive price-searcher marketConsider a price-searching firm, Sean's Fire Engines, which sells fire engines in the fictional country of Pyrotania. Initially, Sean's produced six fireengines but then decided to increase production to seven fire engines. The following graph shows the demand curve the firm faces. To sell theadditional engine, Sean's must lower its price from $100,000 to $50,000 per engine. (Hint: Sean's Fire Engines gains revenue from the additionalengine it sells, but it also loses revenue from the initial six engines because it sells them all at the lower price.)On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial six engines byselling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained fromselling an additional engine at $50,000.re engine)250225200Q SearchRevenue LostCol CENGAGE MINDTAPHomeworkPRICE (Thousands of dollars per fire engine)250225200175150125 +100755025001Sean's Fire Engines23Demand456QUANTITY (Fire engines)7Q Search8910Revenue LostRevenue Gainedincrease production from six to seven fire engines because the change inTrue or False: If Sean's Fire Engines were a price-taking firm instead, and $100,000 were the market price for an engine, increasing its productionwould not affect the price at which it could sell engines.wwQ Search this coursemhp▼ dominates in this scenario.KX4)

Demand curve shows an inverse relationship between price and quantity demanded. The price decrease…

15 IGAGE | Homework PRICE (Thousands of dollars per fire engine) 250 225 200 175 150 125 100 + 75 50 4 25 + 0 0 1 Sean's Fire Engines 2 3 4 5 6 QUANTITY (Fire engines) Demand ▶ Q Search 7 8 9 10 Revenue Lost Revenue Gained increase production from six to seven fire engines because the change in True or False: If Sean's Fire Engines were a price-taking firm instead, and $100,000 were the market price for an engine, in would not affect the price at which it could sell engines. M mhp

15 IGAGE | Homework PRICE (Thousands of dollars per fire engine) 250 225 200 175 150 125 100 + 75 50 4 25 + 0 0 1 Sean's Fire Engines 2 3 4 5 6 QUANTITY (Fire engines) Demand ▶ Q Search 7 8 9 10 Revenue Lost Revenue Gained increase production from six to seven fire engines because the change in True or False: If Sean's Fire Engines were a price-taking firm instead, and $100,000 were the market price for an engine, in would not affect the price at which it could sell engines. M mhp

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

Complete the following table and identify the profit maximising and output. b. What is true about marginal revenue and marginal costs when profit is maximized. c. What would be the profit-maximizing level of output if price fell to $9?
12. A firm faces the following demand and total cost schedules, with all quantities listed on a per-month basis. Suppose that it is required to produce a whole number of items each month. Demand P ($) 20 18 15 12 8 1 2 3 4 5 Total Cost Q 1 2 3 4 5 TC ($) 5 15 30 50 75 a. How much does the firm produce, and at what price? How do you know? b. Suppose that the firm is subject to an excise tax of $5 per item sold. How much does it produce, and at what price? How do you know?
2. The demand curve facing a competitive firm The following graph illustrates the market for small moving trucks in Bloomington, IN, during Indiana's fall move-in week. PRICE (Dollars per small truck) 100 90 Supply X 2 3 6 7 8 QUANTITY (Hundreds of small trucks) 80 70 60 50 40 30 20 10 0 Demand 0 1 4 5 9 10 ? Suppose that YouYeet is one of over a dozen competitive firms in the Bloomington area that offers moving truck rentals. Based on the preceding graph showing the weekly market demand and supply curves, the price You Yeet must take as given is $
Principles of Microeconomics Name: Homework #3 Prof. R. Harris DUE: Wednesday, April 17, 2019 at the beginning of class - NO EXCEPTIONS. Please remember to show all work and please be neat. Please staple this if you print it on your own. 1. Consider the following table of numbers, which represents demand and cost conditions for a com firm. petitive TR 600 0 1 2 $o $400 600 $400 $240 600 $430 $670 $960 $1,350 $1,840 $2,440 $3,120 $3,910 $4,800 600 600 600 600 600 600 5 6 7 600 600 9 10 (a) Fill in the missing values (b) Use the information in the chart to determine what level of output the firm should produce. Explain your reasoning.
What is the firms profit or loss?
Figure 12-6 Price (dollars per pound) 5 Market price 4 3 2 0 10 20 30 MC ATC D = MR 40 Quantity (thousands of pounds) Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. Refer to Figure 12-6. Which of the following statements is true? O Jason cannot earn a profit from selling any number of apples. O Jason should produce where MC equals $3 (point d) where he will maximize his profit. O Jason should produce where MC equals $3 (point d) where he will minimize his losses. Jason should produce where the distance between MC and his demand curve is greatest (point b).
None
Table 15-4 Price per Dose $80 72 Quantity Demanded (dose) 0 1 2 3 4 5 6 24 7 16 8 Shakti Inc. has been granted a patent for its Arnica toothache balm. Table 15-4 shows the demand and the total cost schedule for the firm. 64 56 48 40 32 Total Cost of Production (dollars) $80 Refer to Table 15-4. What is the amount of Shakti's profit? $68 $72 $124 $192 82 88 100 124 164 208 268 340
PROBLEM (4) The short run market supply for shirts is QS = 50P – 1000 and the market demand isQD = 2800 – 50P Let a typical firm operating in a perfectly competitive industry has short-run total cost and marginal cost curves: TC(q) = 100 + 20q + q2 and MC(q) = 20 + 2q (a) Determine the short run market equilibrium price and quantity for this type of shirt.(b) Determine how much the typical firm will produce at the equilibrium price you found in (a).(c) If all firms had the same cost structure, how many firms should be operating in this industry at the moment? (d) Calculate the profit or loss of each firm at the short-run market equilibrium. If they are making losses, why are they still producing in the short run? In the long run, will there be entry into the market or exit from it?(e) What would the price be in the long run equilibrium, assuming constant cost industry?(f) In the long run equilibrium, how many shirts would each firm produce? What would be a firm’s net profit?(g) How…
9 Healthy Harry's Juice Bar has the following cost schedules: yC AY Q (vats) Variable Cost Total Cost $ 30 10 40 55 25 75 3 45 100 70 4 130 100 165 135 a. Calculate average variable cost, average total cost, and marginal cost for each quantity. b. Graph all three curves. What is the relation- ship between the marginal-cost curve and the average-total-cost curve? Between the marginal-cost curve and the average-variable- cost curve? Explain.
The figure below shows the supply and the demand for a good (left) and the cost curves of an individual firm in this market (right). Assume that all firms in this market, including the potential entrants, have identical cost curves. Initially, the market is in equilibrium at point A. Price 6 Cost 17 D 8 10 12 Quantity ATC O the price is $1.00 and the quantity sold is 6 units O the price is $3.00 and the quantity sold is 2 units O the price is $2.00 and the quantity sold is 2 units O the price is $2.00 and the quantity sold is 4 units Quantity Refer to the figure above. Suppose that the market has reached the long-run equilibrium. Then, due to news of the product's defects and recall, the demand falls by 2 units at each price. The market will tend toward the new long run equilibrium where
3. Profit maximization in the cost-curve diagram Suppose that the market for frying pans 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. 100 90 Profit or Loss 80 70 ATC 60 50 40 30 AVC 20 MC 10 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pans per day) In the short run, at a market price of $50 per pan, this firm will choose to produce 37,500 pans per day. PRICE (Dollars perpan)