9 The total cost function for a PC firm is as follows: TC=100+160Q-8Q2+0.4Q3 What is the minimum price a firm would accept to stay open in the short-run? a. P=$20 b. P=$80 c. P=$120 d. P=$100 e. None of the above
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- FITnest is one of the few fitness centers serving the greater area. The gym has been open for 3 years. It charges a flat price of $25 per visit to its clients, and the firm’s current average cost of production is $10 per visit. (You may assume that average cost has the “traditional U-shape”.) a) The owners of the gym heard you are studying economics, and they want some advice on how they could possibly increase their profits through price discrimination, which is a concept they have heard of but do not know much about. Provide an explanation of what price discrimination is and give them an example of how they could use group pricing in their climbing gym business. Explain how group pricing works to increase their profit. b) Given the current situation in the market for fitness in the area, would you expect to see competitors enter or exit the market? Explain. c) Given the current market conditions, what would you predict to observe in the long run with respect to the demand for…LOOKING FOR last two: d. How should this firm change its output to maximize profit if fixed cost changes from 3200 to 3800 (ie. TC=3800+50Q+2Q^2) e. How should firm change its output if VARIABLE cost changes (ex. TC=3200+80Q+2Q^2)4 total cost is c(4, r, q) 5 total 75. If Firm A has constant marginal cost, and input prices double to 2r and 2w, how much will it cost to produce q 6 units of output (what is c(6, 2r, 2w))? (HINT: First calculate the marginal cost for c(q, r, w), then calculate c(6, r, w), and then calculate c(6, 2r, 2w)) = Firm A has cost function c(q, r, w). At output q = cost is c(5,r, q) ○ c(6, 2r, 2w) ○ c(6, 2r, 2w) = 90 ○ c(6, 2r, 2w) = 150 c(6, 2r, 2w) O c(6, 2r, 2w) = 180 - = - 75 160 = 60, and at output q -
- PakPerfect Inc. estimates equation of its total costs of production as TC = 500 + 10Q + 5Q2 and market demand for its product as Qd = 105 – (1/2) P, where Q is quantity in units and P is price in Pak$. Write the equations of the firm’s costs, as a function of Q: Average Total Cost ATC Average Variable Cost AVC Average Fixed Cost AFC Given above costs can you determine what will be the firm’s production in Stage 1? What is the breakeven price and breakeven quantity for this firm? What is the shutdown price and quantity for this firm? Draw the firm’s costs in a graph as per your determination in (a). Label the breakeven and shutdown price and quantity using information in (b) and (c) above. Given the market price of Pak$ 50 how many units should the firm produce? how many firms are competing in this market in short-run? How many firms will be in the industry in the long-run? How do you interpret the profit or loss condition of PakPerfect? Use a two-panel graph of the Market and…A company produces very unusual CD's for which the variable cost is $ 9 per CD and the fixed costs are $ 50,000. They will sell the CD's for $ 57 each. Let x be the number of CD's produced and sold. a. Write the total cost TC as a function of the number of CD's produced and sold. TC = $ b. Write the total revenue TR as a function of the number of CD's produced and sold. TR = $ c. Write the total net income NI as a function of the number of CD's produced and sold. NI = $ d. Find the number of CD's which must be produced and sold to breakeven. The number of CD's which must be produced and sold to breakeven is Round UP to the nearest whole number of CDs. Submit QuestionA company produces very unusual CD's for which the variable cost is $ 11 per CD and the fixed costs are $ 30000. They will sell the CD's for $ 89 each. Let x be the number of CD's produced. a. Write the total cost C as a function of the number of CD's produced. C = $ b. Write the total revenue R as a function of the number of CD's produced. $ R = c. Write the total profit P as a function of the number of CD's produced. $ P = d. Find the number of CD's which must be produced to break even. The number of CD's which must be produced to break even is Round to the nearest number of CDs.
- Use the following graphs for questions 22 and 23. At what price would a firm exit the market? (a) Relationship of total cost to total variable cost and total fixed cost (b) Relationship of marginal cost to average total cost, average variable cost, and average fixed cost Total Costs (dollars) 700 Cost 150 Per 140 TC Unit 130 TVC (dollars) 120 MC 600 110 100 500 90 80 400 70 60 ATC 300 TFC 50 AVC 40 AFC 200 30 20 TFC 100 10 AFC 0 1 2 3 4 5 6 7 8 9 10 11 12 0 1 2 3 4 5 6 7 8 9 10 11 12 Quantity of Output Quantity of Output (units per hour) (units per hour) O $20 O $30 $45 $50Given the cost data in the table below, the firm will shut down and produce zero output if the market price falls below in which case the firm's loss is Average Total Variable Total Cost, Marginal Cost, Average Total Output, Q Variable Cost, Cost, TVCIQ) TC(Q) MC(Q) Cost, ATC(Q) AVCIQ) 80 $9.813.33 $11,813.33 $48.00 $122.67 $147.67 90 $10,260.00 $12,260.00 $42.00 $114.00 $136.22 100 $10,666.67 $12,666.67 $40.00 $106.67 $126.67 110 $11,073.33 $13,073.33 $42.00 $100.67 $118.85 120 $11,520.00 $13,520.00 $48.00 $96.00 $112.67 130 $12,046.67 $14,046.67 $58.00 $92.67 $108.05 140 $12,693.33 $14,693.33 $72.00 $90.67 $104.95 150 $13,500.00 $15,500.00 $90.00 $90.00 $103.33 160 $14,506.67 $16.506.67 $112.00 $90.67 $103.17 170 $15,753.33 $17,753.33 $138.00 $92.67 $104.43 180 $17,280.00 $19,280.00 $168.00 $96.00 $107.11 190 $19,126.67 $21,126.67 $202.00 $100.67 $111.19 200 $21,333.33 $23,333.33 $240.00 $106.67 $116.67 O $40; $12,666.67. O $90; $2,000. O $103.17: $2.000. $90; $0. O $90; $29,000. O…= The short-run marginal and average cost curves for a firm are displayed below. When q = 2 and q = 5, the marginal cost is $3. When q 5, the average cost is $5. Assume the firm has a fixed cost of $5 and they can sell each unit of output at a price of $3 (p = 3). What is the profit- maximizing level of output for the firm in the short-run? Profit maximizing q = LA $ 5 3 2 5 MC AC q
- Tex has a small plant that produces storm windows. Its total revenue function is TR 5.4Q, and the total cost function is TC = 30 + 3Q + 0.03Q2. a. What is the profit maximizing output for Tex? Show your work. What is his selling price? b. How much profit is he making? c. Now assume that Tex has fixed costs of only 5. With this different information, answer parts (a) and (b). How have fixed-cost changes influenced Tex's production decisions? d. Now assume that Tex has fixed costs of 55. How would your answer change to part (c)?10 ATC ATC2 ATC3 ATC, 2 2 4 6 8 10 Quantity (thousands of copies per day) A copy shop is choosing between four different operational sizes (ie, plant size). The average total cost curve for each option is shown in the graph. If the market demand for copies is 12,000 copies per day, how many copy shops would you expect to see in this market? The answer depends on the price of a copy, which is unknown. O 1 (because the copy shop will become a monopoly with a large quantity demanded) O (because the copy shop can't produce 12,000 copies efficiently and will shutdown) 3 (with each shop supplying 4000 copies per day) 8, 6 Average cost (cents per copy)A manufacturer of electric switches in a competitive industry has a fixedmonthly cost of $50,000, total monthly variable cost $100,000, and marginalcost of $5. What is the profit if the monthly production is 100,000 units?Assuming that prices of switches fluctuate from month to month, what is the lowest price the manufacturer can accept in order to stay in business in the long run and in the short run. Will those prices be the same? Show detail work
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