A B C D E Price Quantity (Dollars per air conditioner) (Air conditioners per year) 400 300 200 100 0 TOTAL REVENUE (Thousands of dollars per year) The graph below plots the firm's total revenue curve: that is, the relationship between quantity and total revenue given by the two right columns in the table above. The five choices are also labeled. Finally, two black lines are shown; these lines are tangent to the green curve at points B and D. 50 45 40 35 30 25 20 15 10 0 0 A BA C AD 50 100 150 200 250 300 QUANTITY (Air conditioners per year) 0 100 200 300 400 350 Total Revenue (P x Q) (Dollars per year) 0 30,000 40,000 30,000 0 E A 400 ?

A B C D E Price Quantity (Dollars per air conditioner) (Air conditioners per year) 400 300 200 100 0 TOTAL REVENUE (Thousands of dollars per year) The graph below plots the firm's total revenue curve: that is, the relationship between quantity and total revenue given by the two right columns in the table above. The five choices are also labeled. Finally, two black lines are shown; these lines are tangent to the green curve at points B and D. 50 45 40 35 30 25 20 15 10 0 0 A BA C AD 50 100 150 200 250 300 QUANTITY (Air conditioners per year) 0 100 200 300 400 350 Total Revenue (P x Q) (Dollars per year) 0 30,000 40,000 30,000 0 E A 400 ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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11. A company produces a certain good for which the (inverse) demand function is given by p = 15 - 2q, where p is the unit price (expressed in some monetary unit) and q is the quantity sold (expressed in some non-specified unit). The fixed costs amount to 6.5 monetary units and the variable costs amount to 1 monetary unit per non-specified unit of the good. We assume that all goods produced are sold. a. Find the function equation for the profit functionP in terms of the quantity q. b. Find the domain of the profit function P. c. Determine for which production levels q the company makes a profit.
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4 Given: HP is trying to decide if they should run a 'Back-To-School' special on entry level computers. Estimate the slope of the annual supply & demand curves based on these quarterly price/quantity combinations. Q1: $500 Q2: $700 Price 0.0 Price Qp = 3.75 Question 5: Demand for HP Computers 0.0 0.0+ QD = Question 6: Supply for HP Computers 0.0 4.25 million Q = 6.6 Qs =7.5 million Quantity million Quantity million
4. Profit maximization in the cost-curve diagram Suppose that the market for candles is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point.
a. the increase in profit when output is reduced from 8 to 7 units of output. b. the profit that could be made if output increases from 7 to 8 units of output. c. the deadweight loss associated with the power of the price taking firm. d. the amount of profit when 8 units of output are produced.
Calculate Kenji's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. ? 30 8 COSTS AND REVENUE (Dollars per shirt) 25 15 O 10 0 0 1 2 5 QUANTITY (Shirts) 3 4 6 Kenji's profit is maximized when he produces 7 8 would maximize his profit) is $ which is maximizing quantity corresponds to the intersection of the last condition can also be written as Marginal Revenue shirts. When he does this, the marginal cost of the last shirt he produces is $ which is than the price Kenji receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than than the price Kenji receives for each shirt he sells. Therefore, Kenji's profit- curves. Because Kenji is a price taker, this Marginal Cost
Question 8 Suppose Westland is the only cable TV provider in a city. The table below shows the demand schedule the firm faces and its total costs. What is Westland's optimal number of subscribers? O Price ($/month) Typed numeric answer will be automatically saved. Question 9 56 54 52 50 48 Quantity (subscribers) 20,000 24,000 28,000 32,000 36,000 Total cost ($/month) 1,000,000 1,156,000 1,316,000 1,480,000 1,648,000 ♫
Use the graph above to answer these questions: What is the profit-maximizing level of output? What is the economic profit? What is the per-unit amount of profit at the profit-maximizing level of output?
Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 100 90 70 60 ATC 40 30 20 AVC 10 + ++++ 10 15 20 3 30 35 o 5 QUANTITY (Thousands of jackets) 50 For each price in the following table, use the graph to determine the number ofr jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 10 20 32 COSTS (Dollars)