#7. Lenora and Uma own a dog-grooming business in upstate New York, called Pawkeepsie Groomers. The dog-grooming service market is perfectly competitive. Pawkeepsie Groomers experiences normal cost curves, with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22. Pawkeepsie Groomers will make positive economic profits if the market price is a. $14. b. between $14 and $22. c. below $14. d. $22. e. above $22.
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- After serving as President of the United States for eight years, Dena has retired from politics and has decided to become a wheat farmer. The market for wheat is perfectly competitive and the current market price for wheat is $10 per bushel. Dena is currently producing 8 bushels (Dena can only produce this good in whole units). Her total cost at 8 units of output is $88 and her variable cost at 8 units of output is $64. Dena knows that if she produces a 9th unit her total cost will become $97, and if she produces a 10th unit her total cost will become $110. Dena’s goal is to maximize her profits. Based on this information, identify whether each of the following would be true or false and briefly explain your reasoning. Dena is currently losing money in the short-run and she would be better off if she shutdown and produced zero. Dena is not currently profit maximizing at 8 units of output and she could increase her profits if she expanded output by one unit. Dena would increase her…The following graph plots daily cost curves for a firm operating in the competitive market for fitness trackers. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE(Dollars pertracker) 100 90 70 60 50 40 20 10 0 0 MO ATC AVC 50 60 70 80 10 20 30 40 QUANTITY (Thousands of trackers per day) 90 100 Profit or Loss In the short run, given a market price equal to $45 per tracker, the firm should produce a daily quantity of trackers. On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $45 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. The rectangular area represents a short-run thousand per day for the firm.The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a firm are shown in the figure below. The market price is $26. Instructions: Use the tool provided (Pt. A) to identify the profit-maximizing output. Then use the tool "Profit" to draw the area of profit (or loss) that occurs at this level of output. Position this rectangle by dragging on the vertices. Price/Cost ($) 50 r Tools MC 40 Pt. A Profit ATC 30 AVC 20 10 10 20 30 40 50 Quantity Instructions: Round your answer to the nearest whole number. Use a negative sign if necessary. At the profit-maximizing level of output, average total cost is $ and profit is $
- Question 6 options: The price of a product in a competitive market is $100. The cost per unit of producing the product is c=50+.1x, where x is the number of units produced each month. Find a) The monthly revenue R(x) b) The monthly cost function C(x) c) The monthly profit function P(x) d) Find x such that profit is maximized, and find the maximum profitFarmer Brown grows peaches. The average total cost and marginal cost of growing peaches for an individual farmer are illustrated in the graph to the right. Assume the market for peaches is perfectly competitive and that the market price is $40 per box. Also assume that farmer Brown is producing the amount of peaches that maximizes profits. Use the rectangle drawing tool to shade in farmer Brown's profit. Properly label this shaded area. Carefully follow the instructions above, and only draw the required objects. Price and cost (dollars per box) 48- 44- 40- 36- 32- 28- 24- 20- 16- 12- 8- 4- ATC MC ▬▬▬▬▬▬▬▬▬ Price 0 10 20 30 40 50 60 70 80 90 100 Quantity of peaches (boxes per month in 1000s)Refer to the accompanying figure. If the market for doughnuts is perfectly competitive, then assuming this firm can earn enough revenue to cover its variable cost, it should produce: Price (S/doughnut) 0.35 p 0.30 0.25 0.20 0.15 0.10 0.05 0 0 10 20 30 40 50 60 Marginal Cost 70 80 90 Quantity (doughnuts/day) Average Total Cost 50 doughnuts per day. the quantity of doughnuts at which average total cost is minimized. the quantity of doughnuts at which average total cost equals the market price. the quantity of doughnuts at which marginal cost equals the market price.
- Figure 4.2 shows the cost curves for a typical firm in a competitive market. From the graph, estimate the firm's profits when price equals $10 per unit.Suppose the market price of oranges is $30.00 per crate. Characterize the farmers profit. at $30.00, the farmer will The figure illustrates the average total cost (ATC) and marginal cost (MC) curves for an orange farmer in California. Assume the market for oranges is perfectly competitive. Suppose the market price of oranges is $30.00 per crate. Characterize the farmer's profit. At a $30.00 price, the farmer will make a profit Oranges (crates in 100s) 0.00+ 4.00 8.00- 12.00- N Price and cost (dollars per crate) 10 11 52.00 60.00 56.00- M ATThe 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 $6.00 per pair. Buddies Production Costs MC ($) Quantity of Ear Buds 5 10 15 20 25 30 35 40 2.00 2.45 3.55 4.00 5.50 5.98 8.52 pairs ATC ($) 2.00 2.00 2.15 2.50 2.80 3.25 3.64 4.25 Check my work 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? b. At the profit-maximizing quantity, what is the total cost of producing ear buds? 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? d. Now assume the market price is $5.50 per pair, and Buddies produces the…
- Suppose that over the short run (say the next 5 years), demand for OPEC oil is given by P = 165 – 2.5q. Here q is measured in millions of barrels a day. OPEC marginal cost per barrel is $15. What is OPEC’s optimal level of production? What is the prevailing price of oil at that level? Many experts contend that maximizing short-run profit is counterproductive for OPEC in the long run because high price reduces buyers to conserve energy and spur competition and new exploration that increases the overall supply of oil. Suppose that the demand curve just described will remain unchanged only if oil prices stabilize at $65 per barrel or below. If oil price exceeds this threshold, long run demand (over a second five year-period) will be curtailed to P = 135 – 2.5q. OPEC seeks to maximize its total profit over the next decade. What is the optimum output and price policy? (assume all values are present values)Homework (Ch 14) 3. Profit maximization using total cost and total revenue curves Suppose Amari 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 $20 per phone case. The following graph shows Amari'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 Amari produces. TOTAL COST AND REVENUE (Dollar) 200 175 150 125 100 75 0 -25 D O 1 QUANTITY (Phone cases) Total Cost Total Revenue -A ProfeWill, Jill, and Phil are all wheat farmers. The wheat industry is perfectly (purely) competitive. The first chart shows how much each farmer produces at different price levels. The second chart shows each farmer's minimum average total cost (ATC), average variable cost (AVC), and marginal cost (MC). Based on this data (assuming these three are the only producers), answer the questions that follow. Short-run quantity supplied Price Will Jill Phil $2.00 4 2 0 $4.00 6 4 2 $6.00 9 5 4 $8.00 12 8 6 Firm a. What is the cause of the divergence in the short-run Minimum ATC and long-run supply curves? Minimum AVC Minimum MC $1.00 $2.00 Will Jill Phil $2.50 $5.00 $7.00 $2.50 $0.50 $1.00 $2.00 government regulation changes in the market differing individual cost structures b. Suppose that the market price dips to $2.25 in the short run before ultimately settling at $2.50 per bushel. Who exits immediately, and who exits in the long-run when costs are no longer fixed? Phil exits immediately, Jill…