Perfect Competition and the Supply Curve — End of Chapter Problem3. Bob produces Blu-ray movies for sale, which requires a building and a machine that copies the original movie onto a Blu-ray. Bob rents a building for $30,000 per month and rents a machine for $20,000 a month. Those are his fixed costs. His variable cost per month is given in the accompanying table.Quantity of Blu-raysVC0$01,0005,0002,0008,0003,0009,0004,00014,0005,00020,0006,00033,0007,00049,0008,00072,0009,00099,00010,000150,000 a. The average variable cost (AVC) for a quantity of 6,000AVC, Q = 6,000: $b. The average total cost (ATC) for a quantity of 4,000ATC, Q = 4,000: $c. The marginal cost (MC) of increasing production fromMC: $8,000 to 9,000d. Assuming the current market price is $25, what isBob's profit?Profit: $e. Given the information in part d, this market isto lead to long-run equilibrium.

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Answered: a. The average variable cost (AVC) for…

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Perfect Competition and the Supply Curve — End of Chapter Problem

3. Bob produces Blu-ray movies for sale, which requires a building and a machine that copies the original movie onto a Blu-ray. Bob rents a building for $30,000 per month and rents a machine for $20,000 a month. Those are his fixed costs. His variable cost per month is given in the accompanying table.

Quantity of Blu-rays	VC
0	$0
1,000	5,000
2,000	8,000
3,000	9,000
4,000	14,000
5,000	20,000
6,000	33,000
7,000	49,000
8,000	72,000
9,000	99,000
10,000	150,000

a. The average variable cost (AVC) for a quantity of 6,000
AVC, Q = 6,000: $
b. The average total cost (ATC) for a quantity of 4,000
ATC, Q = 4,000: $
c. The marginal cost (MC) of increasing production from
MC: $
8,000 to 9,000
d. Assuming the current market price is $25, what is
Bob's profit?
Profit: $
e. Given the information in part d, this market is
to lead to long-run equilibrium.

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