24.Use the graph to answer the question Where on the graph would firms be experiencing diseconomies of scale? A-Between A and B. B-Point B. C-Between B and C. D-Between C and D E-Beyond D 25.A firm has a total revenue of $90,000. Its total explicit costs are $50,000, and its total implicit costs are $40,000. What economic profit is the firm earning? A-$50,000. B-$40,000. C-$10,000. D-Indeterminate. E-Normal

24.Use the graph to answer the question Where on the graph would firms be experiencing diseconomies of scale? A-Between A and B. B-Point B. C-Between B and C. D-Between C and D E-Beyond D 25.A firm has a total revenue of $90,000. Its total explicit costs are $50,000, and its total implicit costs are $40,000. What economic profit is the firm earning? A-$50,000. B-$40,000. C-$10,000. D-Indeterminate. E-Normal

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter21: Production And Costs

Section21.4: Costs Of Production: Total, Average, Marginal

Problem 1ST

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Concept explainers

Profit Maximization

Economic activity is related to the use of scarce resources of the economy that are used for producing goods and services which are required to satisfy various demands of the people. In other words, it can be said that it is all about satisfying the unlimited demands of individuals with the limited resources available. The production decision is taken by the producers or the firms. In economics, the terms ‘producers’, ‘suppliers’, and ‘firms’ are interchangeable. Now the question arises, what does a firm actually mean?

Question

24.Use the graph to answer the question

Where on the graph would firms be experiencing diseconomies of scale?

A-Between A and B. B-Point B. C-Between B and C. D-Between C and D E-Beyond D

25.A firm has a total revenue of $90,000. Its total explicit costs are $50,000, and its total implicit costs are $40,000. What economic profit is the firm earning?

A-$50,000. B-$40,000. C-$10,000. D-Indeterminate. E-Normal

10
Long Run Average Total Costs
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6 A
D
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2 3
4
7 8 9
10
Output
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B.
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3.
2.
Cost

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Units of fixed input K Labor Hours (L) Output (Q) TFC TVC TC AFC AVC ATC MC 3 0 0 90 0 90 0 0 0 0 3 1 4 90 20 110 22.5 5 27.5 5 3 2 90 90 40 130 1 0.444 1.444 0.233 3 3 160 90 60 150 0.563 0.375 0.938 0.286 3 4 200 90 80 170 0.45 0.400 0.85 0.5 3 5 230 90 100 190 0.391 0.435 0.826 0.667 3 6 250 90 120 210 0.36 0.480 0.84 1 3 7 260 90 140 230 0.346 0.538 0.885 2 3 8 265 90 160 250 0.340 0.604 0.943 4 If the firm produces 265 units of output and sells it at $1 per unit, is it making profits or losses? How much are they making?
Units of fixed input K Labor Hours (L) Output (Q) TFC TVC TC AFC AVC ATC MC 3 0 0 90 0 90 0 0 0 0 3 1 4 90 20 110 22.5 5 27.5 5 3 2 90 90 40 130 1 0.444 1.444 0.233 3 3 160 90 60 150 0.563 0.375 0.938 0.286 3 4 200 90 80 170 0.45 0.400 0.85 0.5 3 5 230 90 100 190 0.391 0.435 0.826 0.667 3 6 250 90 120 210 0.36 0.480 0.84 1 3 7 260 90 140 230 0.346 0.538 0.885 2 3 8 265 90 160 250 0.340 0.604 0.943 4 If the price of the output is $1, how many units of output should the firm produce to maximize profit? What is the firm’s profit level?
Use the following table to ccalculate TVC - keep your calculation for follow up questions: Total Output Total Cost TFC TVC AFC AVC ATC MC 0 $20 10 $40 20 $60 30 $90 40 $120 50 $180 60 $280 a. Total Output Total Cost TVC 0 $20 $0 10 $40 $20 20 $60 $40 30 $90 $70 40 $120 $100 50 $180 $160 60 $280 $260 b. Total Output Total Cost TVC 0 $20 $20 10 $40 $20 20 $60 $40 30 $90 $70 40 $120 $100 50 $180 $160 60 $280 $260 c. Total Output Total Cost TVC 0 $20 $0 10 $40 $40 20 $60 $60 30 $90 $90 40 $120 $120 50 $180 $180 60 $280 $280 d.…
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The change in fotal costjof production as the output or total product of the business is expanded is: LOTHE Marginal cost (b) The Total variable cost (c) Average variable cost ( Average fixed cost