A profit-maximizing firm in a competitive market is currently producing 200 units of output. It has average revenue of $9 and average total cost of $7. It follows that the firm's O a. average variable cost curve intersects the marginal cost curve at an output level of less than 200 units. O b. average total cost curve intersects the marginal cost curve at an output level of less than 200 units. O c. profit is $400. O d. All of the above are correct.

A profit-maximizing firm in a competitive market is currently producing 200 units of output. It has average revenue of $9 and average total cost of $7. It follows that the firm's O a. average variable cost curve intersects the marginal cost curve at an output level of less than 200 units. O b. average total cost curve intersects the marginal cost curve at an output level of less than 200 units. O c. profit is $400. O d. All of the above are correct.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter8: Output, Price, And Profit: The Importance Of Marginal Analysis

Section: Chapter Questions

Problem 5TY

See similar textbooks

Similar questions

A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
If new technology in a perfectly competitive market brings about a substantial reduction in costs of production, how will this affect the market?
A market in perfect competition is in long-run equilibrium. What happens to the market if labor unions are able to increase wages for workers?
Firms ill a perfectly competitive market are said to be price takers that is, once the market determines an equilibrium price for the product, firms must accept this price. If you sell a product in a perfectly competitive market, but you are not happy with its price, would you raise the price, even by a cent?
Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.
Productive efficiency and allocative efficiency are two concepts achieved in the long mm in a perfectly competitive market. These are the two reasons why we call them perfect. How would you use these two concepts to analyze other market structures and label them imperfect?
The AAA Aquarium Co. sells aquariums for 20 each. Fixed costs of production are 20. The total variable costs are 20 for one aquarium, 25 for two units, 35 for the three units, 50 for four units, and 80 for five units. In the form of a table, calculate total revenue, marginal revenue, total cost, and marginal cost for each output level (one to five units). What is the Profit-maximizing quantity of output? On one diagram, sketch the total revenue and total cost curves. On another diagram, sketch the marginal revenue and marginal cost curves.
What two lines on a cost curve diagram intersect at the zero-profit point?
Explain how the profit-maximizing rule of setting P=MC leads a perfectly competitive market to be allocatively efficient.
Briefly explain the reason for the shape of a marginal revenue curve for a perfectly competitive firm.
A firm in a competitive market receives 500 in total revenue and has marginal revenue of 10. What is the average revenue, and how many units were sold?