A profit-maximizing firm in a competitive industry has the cost structure shown in the table below. Average Average Marginal Total Cost Fixed Cost Quantity Cost 25.00 20.00 4.20 2 14.40 10.00 3.60 3 10.87 6.67 4.20 4 9.40 5.00 6.00 9.00 4.00 9.00 9.33 3.33 13.20 7. 10.26 2.86 18.60 8. 11.70 2.50 25.20 9. 13.62 2.22 33.00 10 16.00 2.00 42.00 Calculate this firm's shut-down price, and explain your answer. What is this firm's supply curve? In answering this question, indicate the minimum price necessary for the firm to produce a positive quantity and the quantity it would produce that minimum price? (Hint: Draw on your answer to part a.) If marginal revenue is $9, how much output will the firm produce, and how much profit will it make? Show your calculations.

A profit-maximizing firm in a competitive industry has the cost structure shown in the table below. Average Average Marginal Total Cost Fixed Cost Quantity Cost 25.00 20.00 4.20 2 14.40 10.00 3.60 3 10.87 6.67 4.20 4 9.40 5.00 6.00 9.00 4.00 9.00 9.33 3.33 13.20 7. 10.26 2.86 18.60 8. 11.70 2.50 25.20 9. 13.62 2.22 33.00 10 16.00 2.00 42.00 Calculate this firm's shut-down price, and explain your answer. What is this firm's supply curve? In answering this question, indicate the minimum price necessary for the firm to produce a positive quantity and the quantity it would produce that minimum price? (Hint: Draw on your answer to part a.) If marginal revenue is $9, how much output will the firm produce, and how much profit will it make? Show your calculations.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PQ 14.05 Reagan is a farmer and sells her wheat in a perfectly competitive market. Reagan produces 30,000 bushels of wheat for an average total cost of $7.50, marginal cost of $7.30, and average variable cost of $7.10. In the short-run, Reagan should produce more wheat if the current price is above, and should shut down if the current price is below Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $7.50; $7.30 $7.50; $7.10 $7.10; $7.30 $7.10; $7.00 e $7.30; $7.10 f $7.30; $7.00
Price 21 20 19 18 17 16 15 14 13 12 11 10 9 7 6 5 43210 3- ABCD Marginal cost A Average total cost Average variable cost 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 Quantity Which point or points are included in the firm's supply curve in the short run? None of these points are on the firm's short-run supply curve. B с D
Draw and describe a diagram representing the cost curves – MC, AC, and AVC – for a profit-maximizing firm under perfect competition. Show U-shaped AC and AVC curves. Label the breakeven and shut down prices. Also, show a price between the breakeven and shut down prices and explain how the firm decides on its profit-maximizing/loss-minimizing output level at that price and show how the amount of profit or loss can be shown in the diagram. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
The following questions are based on the key below Assume that you are given cost and price data for a number of competitive firms at their present output levels. In all cases the marginal cost is increasing. With this information, indicate whether each firm should, in the short run: 1. produce more 2. produce less. 3. shut down 4. cannot be determined from the information. Refer to the intormation above to answer this question. If the firm's total variable costs exceed its total revenue, what should the firm do? Select one: A 1. B. 2 C 3 O D4
Question 5.5 T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should shut down in the short run. decrease output to 2,500 units. ontinue to produce 3,000 units. increase output to 3,500 units.
A firm has fixed costs of $40 and variable costs as indicated in the table below. For each level of output (total product) calculate total cost, average fixed cost, average variable cost, average total cost and marginal cost. Write your response in the table provided. b) Discuss why a firm in perfect competition will not charge a price above or below the market price.
In pure competition, product price is Greater than marginal revenue Equal to marginal revenue Equal to total revenue Greater than total revenue
Problems: Question #6: The Phantom Farms bakery produces pumpkin pies according to the following short run cost schedules. Assume the pumpkin pie industry is perfectly competitive and that the bakery can only produce and sell whole pies. AVC = ATC = MC = Quantity (pies) TFC = total TVC = total TC = total fixed cost variable cost average average total marginal cost variable cost cost cost (i) same as (i) 1 14 18 14.0 18 14 2 same as (i) (ii) 28 12.0 14 10 3 same as (i) 38 42 12.7 (v) 14 4 same as (i) 60 (iii) 15.0 16 22 same as (i) 86 90 17.2 18 (vi) same as (i) 116 120 (iv) 20 30 Fill in the five missing cost numbers indicated in the table above. (i) (ii) (iii) (iv) (v) (vi) If the price of pumpkin pies is $22 per pie, how many pies should Phantom Farms produce in the short run? What profit or loss does the firm earn? Explain how you arrived at this answer. Illustrate Phantom Farms' choice with a graph and indicate profits or losses. 3
Question 11 11.1. Revenue is the same as profit. Do you agree with this statement? Justify your answer. 11.2. Using your knowledge of cost formulas and calculations for a firm producing in the short-run, redraw the table below in your answer book and complete the table by filling in the blank spaces. [Tip: Answers should be rounded off by two decimals]. (5) Total Average Variable Cost Average Total Cost (ATC) Total Total Cost Average Fixed Fixed Cost Marginal Cost (MC) Variable Quantity Cost Cost (TFC) (TVC) (TC) (AFC) (AVC) 80 80 1 80 12 80 12 2 80 28 40 14 54 3 34 114 26.67 38 6. 4 80 39 119 20 9.75 29.75 80 42 122 16 8.4 24.4 80 128 13.33 8 21.33 7 80 56 136 11.43 8 8 80 61 141 10 7.63 17.63 9 80 68 148 7.56 16.44 10 80 157 8 7.7 15.7 9. 11.3. Suppose a firm producing coffee provides you with the following information: Price = R100 Quantity = 150 units of coffee Cost of production = R9500 11.3.1. Calculate the total revenue of the firm. 11.3.2. Is the firm currently making a profit…
Table Cost.EX2.2: Data for a Competitive Firm Marginal Marginal Output Cost Revenue (Q) (MC) (MR) 10 $3.00 $4.00 11 $3.50 $4.00 12 $4.00 $4.00 13 $4.50 $4.00 14 $5.00 $4.00 15 $5.50 $4.00 16 $6.00 $4.00 Refer to Table Cost.EX2.2. If the firm wishes to maximize profit, it should produce units. O 10 O 12 O 11 6.
What type of industry is described by the term "perfect competition"? an industry in which numerous price-taking firms produce identical products an industry in which a few price-taking firms produce identical products an industry in which firms are price takers and compete for market share by varying the qualitative characteristics of products an industry in which numerous firms are price makers and produce identical products 00OO
Imagine that you are a price-taking firm with the following total cost schedule. Q 1 2 3 5 6 8 9 TC 10 16 20 23 27 32 38 45 53 Assume that if this firm produces zero they have a total cost of zero. (That is in italics because it's important. Notice that this is a problem we have done before except for a little twist. Can you notice what it is?) Another way of saying this is that there is no fixed cost. Fill in the following supply schedule. (Enter only integers.) (If you don't know what I'm talking about, pleeeeeease go back and figure out what supply means before you try to answer!) [Here is a hint: For each price and quantity you propose, check the profit.] P Qs 3 4 6 8