5. Short-run equilibriumConsider a perfectly competitive market for wheat in Chicago. There are 120 firms in the industry, each of which has the cost curves shown on thefollowing graph:(?10090MC807060ATC504030AVC2010101520253035404550OUTPUT (Thousands of bushels)COST (Cents per bushel) 100Demand90Supply Curve807060Equilibrium503020106001200 1800 2400 3000 3600 4200 4800 5400 6000QUANTITY (Thousands of bushels)At the current short-run market price, firms willv in the short run. In the long run,the marketgiven the current market price.PRICE (Cents per bushel)

We are going to find the Supply schedule for 120 firms with the help of Supply schedule for a single…

5. Short-run equilibrium Consider a perfectly competitive market for wheat in Chicago. There are 120 firms in the industry, each of which has the cost curves shown on the following graph: 100 90 MC 80 70 60 ATC 50 40 30 AVC 20 10 5 10 15 20 25 30 35 40 45 50 OUTPUT (Thousands of bushels) CST (Cents per bushel)

5. Short-run equilibrium Consider a perfectly competitive market for wheat in Chicago. There are 120 firms in the industry, each of which has the cost curves shown on the following graph: 100 90 MC 80 70 60 ATC 50 40 30 AVC 20 10 5 10 15 20 25 30 35 40 45 50 OUTPUT (Thousands of bushels) CST (Cents per bushel)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Quizzes 2 $15+ $12 $10+ $7 0000 FIRM I MC ATC AVC q 20 30 38 48 55 The above graph represents a firm in a perfectly competitive market. If the price the firm receives for its product is $10 and the firm is producing a profit-maximizing quantity, then what is the firm's profit? -$60 $96 $114 $0
50 MC ATC 40 30 MR 10 10 20 30 40 Quantity (per day) The figure above shows a perfectly competitive firm. The firm is operating; that is, the firm has not shut down. a) What is the output level should the firm produce to maximize the profit? b) What is the price does the firm charge at this output level? Price and costs (dollars) 20
Consider a perfectly competitive market for wheat in Toronto. There are 90 firms in the industry, each of which has the cost curves shown on the following graph:
9.7. A producer operating in a perfectly competitive market has chosen his output level to maximize profit. At that output, his revenue and costs are as follows: Revenue Variable costs $200 $120 $60 Sunk fixed costs Nonsunk fixed costs $40 Calculate his producer surplus and his profits. Which (if either) of these should he use to determine whether he should exit the market in the short run? Briefly explain. 9.8. Dave's Fresh Catfish is a northern Mississippi farm that operates in the perfectly competitive catfish farming industry. Dave's short-run total cost curve is STC(Q) = 400 + 2Q + 0.5Q², where Q is the number of catfish harvested per month. The corresponding short-run marginal cost curve is SMC(Q)=2+ Q. All of the fixed costs are sunk. a. What is the equation for the average variable cost (AVC)? b. What is the minimum level of average variable costs? c. What is Dave's short-run supply curve?
The accompanying graph depicts the cost curves of an individual firm in a perfectly (or purely) competitive industry.
Brody's firm produces trumpets in a perfectly competitive market. The table below shows Brody's total variable cost. He has a fixed cost of $240, and the price per trumpet is $60.-Calculate the average total cost of producing 6 trumpets. Show your work. -Calculate the marginal cost of producing the 11th trumpet. -What is Brody's profit-maximizing quantity? Use marginal analysis to explain your answer. -At the profit-maximizing quantity you determined in part (c), calculate Brody's profit or loss. Show your work. -Brody also produces saxophones at a loss in a perfectly competitive market. Draw a correctly labeled graph for Brody's firm showing the following at a market price of $200. -Brody's profit-maximizing quantity of saxophones -Brody's loss, completely shaded Quantity Total Variable cost 6 $120 7 $145 8 $165 9 $220 10 $290 11 $390
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 20 1.00 25 2.00 1.20 30 2.46 1.41 35 3.51 1.71 40 4.11 2.01 45 5.43 2.39 50 5.99 2.75 55 8.47 3.27 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? 2$ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? 2$
Astro Computers makes onboard vehicle control computers for the Tesla. The production department has gathered data on the costs of several yearly production levels and asked you to help interpret these for them. 1. The data for Astro appear in the graph below. The COO asks what production level he should set for the coming year, if Astro operates in a perfectly competitive market. (the graph is in the picture) 2. Is Astro earning “excess profit” (explain what that means if you think they are) and how other firms will react when they see Astro’s performance? 3. The production department has also done a bit of research on other firms operating in the market for onboard control computers. The graph below shows the relative sizes and cost structures of the four largest firms in the market (Data, Astro, Consolidated and BCS); these four firms combined account for 35% of business in the market for onboard control computers. There are over fifteen firms that supply onboard control computers…
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8. Refer to the information in the table below to answer the following questions: TVC €0 10 15 Quantity of fruit baskets 0 1 2 3 4 5 6 TFC €50 50 50 50 50 50 50 21 31 46 68 TC MC -- 10 5 6 10 15 22 a) The firm sells fruit baskets in a perfectly competitive market. Calculate the firm's total cost for each level of production and complete the table. b) Assume that the market price of a fruit basket is €15. To maximize profit, how many fruit baskets should the firm sell? c) At the profit-maximizing quantity, what is the profit?
18 Market Representative Firm MC i of A a $7 MR = P ATC b $5 AVC $2 D1 18,000 70 100 115 Quantity (Q) Output (Q) The diagram above shows a Perfectly Competitive market on the left, and a representative firm supplying in that market on the right. In the long run we would expect the market and the Price to Select one: a. existing firms to exit; increase b. new firms to enter; increase С. new firms to enter; decrease d. existing firms to exit; decrease Price $$$
t of 40 40 35 55 30 25 25 20 15 10 5 MC, AC MC AC 9 0 100 200 300 400 500 The graph shows average and marginal cost curves for a typical firm in a perfectly competitive industry in LONG-RUN equilibrium. The long-run equilibrium price of the product is $ In long-run equilibrium the firm will produce units. In long-run equilibrium the firm will earn $ economic profit.