21. The long-run average cost curve for an industry is represented in the following graph. Add short-run average cost curves and short-run marginal cost curves for three firms in this industry, with one firm producing an output of 10,000 units, one firm producing an out put of 20,000, and one firm producing an out- put of 30,000. Label these as Scale 1, Scale 2, and Scale 3, respec- tively. What is likely to happen to the scale of each of these three firms in the long run? Cost per| unit ($) LRAC 10,000 20,000 30,000 Units of output

21. The long-run average cost curve for an industry is represented in the following graph. Add short-run average cost curves and short-run marginal cost curves for three firms in this industry, with one firm producing an output of 10,000 units, one firm producing an out put of 20,000, and one firm producing an out- put of 30,000. Label these as Scale 1, Scale 2, and Scale 3, respec- tively. What is likely to happen to the scale of each of these three firms in the long run? Cost per| unit ($) LRAC 10,000 20,000 30,000 Units of output

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The company XYZ produces chairs and its costs are given in the table below. Variable Quantity Total Costs Variable Costs Fixed Costs Value 30 $3,600 $2,400 $1,200 In the short run, should this company shut down if the price of the chair is $95/unit? a. Yes, because the average total cost is higher than the price. b. Yes, because the average variable cost is higher than the price. O c. No, because the average total cost is higher than the price. d. No, because the average variable cost is lower than the price.
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In perfect competition, if the marginal cost increases which way does the curve shift? what are some things that would increase the marginal cost curve and if the MC curve shifts then does the ATC curve?
Calculate the average total, fixed and marginal costs for a “competitive” firm with the following production cost schedule. q Total Cost ATC AFC MC0 10 10 12 20 16 30 26 40 38 50 75 60 120
Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. What is ATC per unit for each level of output listed in the table? Instructions: Round your answers to 2 decimal places. Output TC MC ATC 25,000 100,000 $ 0.50 50,000 150,000 1.00 75,000 187,500 2.50 100,000 275,500 3.00 Is this a decreasing-cost industry? (Click to select) Suppose that the market price for a bottle of vitamins is $2.5 and that at that price the total market quantity demanded is 75,000,000 bottles. How many firms will there be in this industry? firm(s). Suppose that, instead, the market quantity demanded at a price of $2.5 is only 75,000. How many firms do you expect there to be in this industry? ) firm(s). Review your answers to parts b, c, and d. Does the level of demand determine this industry's market…
4. Total cost, average cost, and marginal cost in the short run Suppose Kenji runs a small business that manufactures frying pans. Assume that the market for frying pans is a price-taker market, and the market price is $20 per frying pan. The following graph shows Kenji's total cost curve. Use the blue points (circle symbol) to plot total revenue, and the green points (triangle symbol) to plot profit for the first seven frying pans that Kenji produces, including zero frying pans. TOTAL COST AND REVENUE (Dollars) 175 125 100 75 50 25 o $$ D 0 D 1 2 4 5 QUANTITY (Frying pans) Total Cost 7 Total Revenue Profit
Question 2 The market for hand-made bar soaps in Vancouver is perfectly competitive. The marginal cost function for each (identical) firm is given by MC = 2QS + 4. Also suppose the short run cost functions are the same as the long run cost functions. If the market price P is $10. What is the individual firm's MC? a) 8 b)14 c)10 d)12 Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line
Which of the following is correct if the firm described in Figure 7-4 decides to produce nothing? a. Total cost will be zero. b. Total fixed cost will be zero. c. Total variable cost will be zero. d. Average cost will be zero. e. It is impossible for the firm to produce nothing in the short run.
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A firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $350, and if it produced 700 units per day, its total cost would be $325. Instructions: Enter your answers rounded to two decimal places. a. What is the firm's ATC per unit at these three levels of production? At 1,200 units per day, ATC = $ At 1,000 units per day, ATC = $ At 700 units per day, ATC = $ b. If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium? (Click to select) V c. From what you know about these firms' cost structures, what is the highest possible price per unit that could exist as the market price in long-run equilibrium? 2$ d. If that price ends up being the market price and if the normal rate of profit is 10 percent, then what will each firm's accounting profit per unit be? cents per unit
The owner of Tie-Dyed T-shirts, a perfectly competitive firm, hires you to give him economic advice. He tells you that the market price for his shirts is $15 and that he is currently producing 200 shirts at an AVC of $10 and an ATC of $20. What would you recommend that he do? O a. Tell him that you cannot make any recommendations until you know what his fixed costs are. O b. Continue producing in the short run, as his loss from production is less than his fixed costs, but exit the industry in the long run if there are no changes in economic conditions. Oc Shut down in the short run, as he is incurring a loss, and leave the industry in the long run, if there are no changes in economic conditions. O d. Continue to produce in the short run, even though he is earning a loss, and expand production in the future hoping to increase market share and total revenue.
A firm in a purely competitive industry is currently producing 1,400 units per day at a total cost of $500. If the firm produced 1,200 units per day, its total cost would be $350, and if it produced 900 units per day, its total cost would be $325. Instructions: Enter your answers rounded to two decimal places. a. What is the firm's ATC per unit at these three levels of production? At 1,400 units per day, ATC = $ At 1,200 units per day, ATC = $ At 900 units per day, ATC = $ b. If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium? |(Click to select) ♥ c. From what you know price in long-run equilibrium? pout these ns' cost structures, what the highest possible price per unit could exist as the market 2$ d. If that price ends up being the market price and if the normal rate of profit is 10 percent, then what will each firm's accounting profit per unit be? cents per unit