4. Study Questions and Problems #4The market equilibrium price for wheat is $4 per bushel.On the following graph, use the green line (triangle symbol) to plot the marginal revenue curve for a typical wheat farmer. Use the orange line (squaresymbol) to plot the total revenue curve for this farmer.TOTAL REVENUE & MARGINAL REVENUE (Dollars per bushel)10991234 6 6 7 8 9 10QUANTITY (Bushels)Marginal RevenueTotal Revenue?True or False: Marginal revenue is the change in total revenue per bushel. In this case, $4 is the marginal revenue that remains constant and equal toprice.TrueFalse

Market equillibrium price for wheat at $4 per bushel. Explanation:Step 1:Each producer makes up a…

Answered: 4. Study Questions and Problems #4 The…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following statements is true ? A. A firm should increase quantity as long as price is higher than average cost, regardless of the marginal cost B. A firm should increase quantity as long as price is greater than marginal cost C. A firm should increase quantity as long as average cost is greater than price D. A firm should increase quantity as long as marginal cost is greater than price
1. Price and output in a competitive price-searcher market Consider a price-searching firm, Sean's Fire Engines, which sells fire engines in the fictional country of Pyrotania. Initially, Sean's produced six fire engines but then decided to increase production to seven fire engines. The following graph shows the demand curve the firm faces. To sell the additional engine, Sean's must lower its price from $100,000 to $50,000 per engine. (Hint: Sean's Fire Engines gains revenue from the additional engine 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 by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. re engine) 250 225 200 Q Search Revenue Lost Col
Marginal Revenue, Marginal Cost, Marginal Profit: MR=MC MC Marginal Profit 0 quantity (firm) 3:57 / 4:19 YouTube E} CC 74. In the video, when MC > MR, what action should the firm take to Maximize Profit. Select one: a. Increase Price b. Decrease Quantity c. Decrease Price d. Increase Quantity Check Costs & Revenues
Figure 14-2 Suppose a firm operating in a competitive market has the following cost curves: 20 MC 18 16 14 12 ATC 10 8 7 4 1 3 4 5 6 7 8 9 10 QUANTITY Refer to Figure 14-2. If the market price is $10, what is the firm's total revenue? a. $35 b. $30 C. $15 d. $50 PRICE
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?
(Figure: Maximum Profit in Perfect Competition 3) Price and Costs $16 B 0 A) C. D In the figure, profit is maximized at point: B. A. D. IC Questions Filter (35) B D MC MR-P ATC 9 Quantity I
What is the firms profit or loss?
Price $3 2 10,000 20,000 30,000 S D Quantity Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high. the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low. the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low. producers should lower the price to $1 in order to sell the quantity demanded of 10,000.
19. Dani sells roses in a competitive market where the price of a rose is $8. Use this information to fill out the revenue columns in the table. Quantity of Roses Total Revenue Average Revenue Marginal Revenue 1 2 3 4 5
6. The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently incurring economic losses. a. How does the price of fertilizer compare to the average total cost, the average variable cost, and the marginal cost of producing fertilizer? b. Draw two graphs, side by side, illustrating the present situation for the typical firm and for the market. c. Assuming there is no change in either demand or the firms’ cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market.
3. Profit maximization using total cost and total revenue curves Suppose Yakov 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 Yakov'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 Yakov produces. Yakov's profit is maximized when he produces teddy bears. When he does this, the marginal cost of the last teddy bear he produces is , which is ___ than the price Yakov receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is , which is than the price Yakov receives for each teddy bear he sells. Therefore, Yakov's profit-maximizing quantity corresponds to the intersection of the…
2. Many small boats are made of fiberglass, which is derived from crude oil. Suppose that the price of oil rises. ( a ) Using diagrams, show what happens to the cost curves of an individual boat-making firm and to the market supply curve.( b ) What happens to the profits of boat makers in the short run? What happens to the number of boat makers in the long run?

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