2.) Production, Inputs, and Cost: Building Blocks for Supply Analysis First, use the following schedule to calculate the marginal revenue, the marginal cost, the total profit, and the marginal profit. Then, list the formula for total revenue and total cost. Lastly, discuss the condition under which the firm will earn a profit, incur a loss, the output that maximizes the perfectly competitive firm's profit, and under which a firm is maximizing profit by minimizing loss. Total Marginal Marginal Marginal Profit (MP) Quantity Total Cost Total Profit Revenue Revenue Cost |(TR) $0.00 $30.00 (MR) (TC) $0.00 (MC) (ТР) 10 $38.00 20 $60.00 $90.00 $87.00 $45.50 $78.00 $137.50 30 $120.00 $150.00 $180.00 $210.00 40 50 60 $158.00 70 $240.00

2.) Production, Inputs, and Cost: Building Blocks for Supply Analysis First, use the following schedule to calculate the marginal revenue, the marginal cost, the total profit, and the marginal profit. Then, list the formula for total revenue and total cost. Lastly, discuss the condition under which the firm will earn a profit, incur a loss, the output that maximizes the perfectly competitive firm's profit, and under which a firm is maximizing profit by minimizing loss. Total Marginal Marginal Marginal Profit (MP) Quantity Total Cost Total Profit Revenue Revenue Cost |(TR) $0.00 $30.00 (MR) (TC) $0.00 (MC) (ТР) 10 $38.00 20 $60.00 $90.00 $87.00 $45.50 $78.00 $137.50 30 $120.00 $150.00 $180.00 $210.00 40 50 60 $158.00 70 $240.00

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

Assume that the cost data in the following table are for a purely competitive producer: Average Average Average Total Variable Marginal Cost Total Fixed Product Cost Cost Cost 1 $60.00 $45.00 $105.00 $ 45.00 30.00 42.50 72.50 40.00 3 20.00 40.00 60.00 35.00 4 15.00 37.50 52.50 30.00 12.00 37.00 49.00 35.00 6. 10.00 37.50 47.50 40.00 7 8.57 38.57 47.14 45.00 7.50 40.63 48.13 55.00 9. 6.67 43.33 50.00 65.00 10 6.00 46.50 52.50 75.00 Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Select "Not applicable" and enter a value of "0" for output if the firm does not produce. a. At a product price of $57.00 (i) Will this firm produce in the short run? (Click to select) V (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? |(Click to select V output = units per firm (iii) What economic profit or loss will the firm realize per unit of output? |(Click to select v per unit = $ b.…
9. Problems and Applications Q9 The market for apple pies in the city of Ectenia is competitive and has the following demand schedule: Each producer in the market has a fixed cost of $6 and the following marginal cost: Quantity Marginal Cost (Dollars) 1 1 2 3 4 5 6 Complete the following table by computing the total cost and average total cost for each quantity produced. Quantity Total Cost Average Total Cost (Ples) (Dollars) (Dollars) 1 2 3 4 3 8 10 12 14 The price of a pie is now $11. At a price of $11, making a profit of O True O Fal pies are sold in the market. Each producer makes True or False: The market is in long-run equilibrium. Suppose that in the long run there is free entry and exit. In the long run, each producer earns a profit of each producer makes pies, so there are The market price is producers operating. pies, so there are At this price, producers in this market, each pies are sold in this market, and
4. For each of the following production functions, write the equation and graph the supply curve of the firm if w=20 and r=50 When the price of output is $20, how much will the firm offer to the market and what are the profits of the firm? a. Q = 10 K^.2L^.5B^.1 in the long-run with capital flexible. B is the amount of Building Space employed, which is held fixed at 1 unit in both the long-run and the short-run and has a price of $100 per unit. b. Q= (4K^.6 + 8L^.6)^ 1.25
Figure 12-6 Price (dollars per pound) Market 3 price 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. Jason is currently producing 20 thousand pounds of apples. To maximize his profit Jason should keep production at 20 thousand pounds. O increase production to the output rate indicated by point e. increase production to the output rate indicated by point d. O decrease production to the output rate indicated by point a.
7. You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production: Output = 2000 pounds, market price = $5.00, total cost =$8000, fixed cost=$2000, marginal cost=$5. The minimum of AVC occurs at {1000 pounds at $2} and the minimum of ATC at {1500 pounds at $3.5}. Please help Jack with the following questions based on the above figures: a. Draw a graph for the raw cotton market and a graph for Jack’s farm current situation that includes MC, ATC, and AVC, labeling all relevant points on axes with numerical values. Is Jack maximizing the profit (minimizing the loss)? Why or why not? Label the total profit/loss area. b. Suppose more farmers enter the raw cotton market until the market price is $3.00 per pound. On the same graphs, show the effect of this change in the market place. Would you like to suggest Jack leaving the market in the short run? Explain your answe
6. Deriving the short-run supply curve Consider the competitive market for dress shirts. 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. COSTS (Dollars) PRICE (Dollars per shirt) 100 90 80 70 60 50 100 40 90 10 80 0 70 Price (Dollars per shirt) 60 50 20 10 0 0 For each price in the following table, use the graph to determine the number of shirts 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 shirts 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. 15 20 25 55 70 85 10 0 0 0 MC D ATC On the following graph, use the orange points (square symbol) to plot points along the…
11. Profit maximization using total cost and total revenue curves Suppose Edison runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $25 per shirt. The following graph shows Edison's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven (inclusive) that Edison produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 0 -25 Ho 0 ☐ 1 ☐ 2 ☐ ▬▬▬ 3 4 5 QUANTITY (Shirts) ■ 6 Total Cost 7 8 O Total Revenue Profit ?
3. Profit maximization using total cost and total revenue curves Suppose Madison operates a handicraft pop-up retail shop that sells phone cases. Assume a perfectly competitive market structure for phone cases with a market price equal to $25 per phone case. The following graph shows Madison's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for phone cases for quantities zero through seven (including zero and seven) that Madison produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 0 * U 0 1 O 2 n D 0 3 QUANTITY (Phone cases) ■ Total Cost O Total Revenue Profit Calculate Madison's marginal revenue and marginal cost for the first seven phone cases they produce, 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 at each quantity.
4. Profit maximization in the cost-curve diagram Suppose that the market for candles 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.
7. Short-run supply and long-run equilibrium Consider the perfectly competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per kilogram) 80 72 64 56 48 40 32 16 8 0 0 4 MC 8 ATC AVC □ 12 16 20 24 28 32 QUANTITY (Thousands of kilograms) 36 The following diagram shows the market demand for copper. □ 40 ? Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry…
4. Profit maximization in the cost-curve diagram Suppose that the market for candles is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. (Note: Area in blue rectangle is shown in thousands.) 32 28 V 24 ATC AVC MC PRICE (Dollars per candle) 40 36 8 4 0 0 + 2 4 8 6 10 QUANTITY (Thousands of candles) 12 14 16 18. 20 6,000 In the short run, at a market price of $20 per candle, this firm will choose to produce candles per day. 8,000 Profit or Loss (in thousands) ? On the previous graph, 9,000 the blue rectangle (circle symbols) to shade the area (in the 12000 ands) representing the firm's profit or loss if the market price is $20 and the firm chooses to produce the quantity you already selected. Note: In the following question, you should enter a positive number in the numeric entry field. [$ The area (in thousands) of this rectangle indicates that the firm's would be per day.
Calculate Madison's marginal revenue and marginal cost for the first seven cardigans they produce, 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 at each quantity. (?) COSTS AND REVENUE (Dollars per cardigan) 40 35 30 0 0 1 2 5 QUANTITY (Cardigans) 4 6 7 8 Marginal Revenue Marginal Cost Madison's profit is maximized when they produce a total of cardigans. At this quantity, the marginal cost of the final cardigan they produce is $ , an amount than the price received for each cardigan they sell. At this point, the marginal cost of producing one more cardigan (the first cardigan beyond the profit maximizing quantity) is $ , an amount than the price received for each cardigan they sell. Therefore, Madison's profit-maximizing quantity occurs at the point of intersection between the curves. Because Madison is a price taker, the previous condition is equivalent to