A local shoe has total costs of production given by the equation TC-125+10q+5q². The market demand for shoes is given by the equation QD=50- (1/5) *P. a) Write the equations showing the average total cost and average variable cost and average fixed cost, each as a function of q. b) What is the breakeven price and breakeven quantity for this firm in the short run? c) What is the shutdown price and shutdown quantity for this firm in the short run? d) If the market price of the output is $50, how many units will this firm produce? e) Given a market price of $50. how many firms are in this market?

A local shoe has total costs of production given by the equation TC-125+10q+5q². The market demand for shoes is given by the equation QD=50- (1/5) *P. a) Write the equations showing the average total cost and average variable cost and average fixed cost, each as a function of q. b) What is the breakeven price and breakeven quantity for this firm in the short run? c) What is the shutdown price and shutdown quantity for this firm in the short run? d) If the market price of the output is $50, how many units will this firm produce? e) Given a market price of $50. how many firms are in this market?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A local shoe has total costs of production given by the equation TC-125+10q+5q². The market
demand for shoes is given by the equation QD-50- (1/5) *P.
a) Write the equations showing the average total cost and average variable cost and average fixed
cost, each as a function of q.
b) What is the breakeven price and breakeven quantity for this firm in the short run?
c) What is the shutdown price and shutdown quantity for this firm in the short run?
d) If the market price of the output is $50, how many units will this firm produce?
e) Given a market price of $50. how many firms are in this market?

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Step 2: a) Equations showing average total cost, average variable cost, and average fixed cost.

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Step 3: b) Breakeven price and breakeven quantity.

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Step 4: c) Shutdown price and shutdown quantity.

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Step 5: d) Output that will be produced at a market price of $50.

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Step 6: e) Number of firms at a price of $50 per unit.

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