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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?

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?

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter8: Perfect Competition
Section: Chapter Questions
Problem 1SCQ: Firms ill a perfectly competitive market are said to be price takers that is, once the market...
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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?
Transcribed Image Text: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?
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