Answer the following questions and submit to the appropriate space on Be careful to completely and correctly label all of the parts of any graph you draw. Please be a neat as possible. 1. The Wernham Hogg Paper Company is a representative firm in a purely/perfectly competitive. constant-cost market. The market is currently in a long-run equilibrium a Use the blank axes below to draw completely and thoroughly labeled side-by-side graphs for the paper market and for Wernham Hogg Make sure that you clearly indicate the price and quantity of paper in the market and price and quantity for Wernham Hogg Paper is a normal good. As the result of an economic slowdown, a large number of consumers lose their jobs and their paychecks. Wernham Hogg's paper mills continue to operate. Use the graphs you drew about to show how the fall in consumer income impacts the following items in the short run L Market price and quantity & Wernham Hogg's price and quantity Shade the rectangle representing Wernham Hogg's profit or loss c. Remember that Wernham Hogg is continuing to produce paper in the midst of the economic slowdown. What must the price of paper be for this to make economic sense for the firm

Answer the following questions and submit to the appropriate space on Be careful to completely and correctly label all of the parts of any graph you draw. Please be a neat as possible. 1. The Wernham Hogg Paper Company is a representative firm in a purely/perfectly competitive. constant-cost market. The market is currently in a long-run equilibrium a Use the blank axes below to draw completely and thoroughly labeled side-by-side graphs for the paper market and for Wernham Hogg Make sure that you clearly indicate the price and quantity of paper in the market and price and quantity for Wernham Hogg Paper is a normal good. As the result of an economic slowdown, a large number of consumers lose their jobs and their paychecks. Wernham Hogg's paper mills continue to operate. Use the graphs you drew about to show how the fall in consumer income impacts the following items in the short run L Market price and quantity & Wernham Hogg's price and quantity Shade the rectangle representing Wernham Hogg's profit or loss c. Remember that Wernham Hogg is continuing to produce paper in the midst of the economic slowdown. What must the price of paper be for this to make economic sense for the firm

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 5: Perfect Competition Use the cost schedule below to answer the following questions about a price-taking firm who produces discrete units (there cannot be a half-computer in this world). ATC is average total cost, AVC is average variable cost and AFC is average fixed cost. Computers per Day Fixed Cost Variable Cost Total Cost Marginal Cost АТС AVC AFC Price $30 $0 $35 1 $30 $20 $30 $30 3 $30 $40 4 $30 $60 $30 $90 6. $30 $130 7 $30 $180 8 $30 $240 $30 $310 10 $30 $390 1. Fill out the schedule above. 2. Given the price information you've received, how many computers/day will the firm produce? What will be the economic profit (or loss) this firm receives? 3. If the firm is making a positive profit, do you expect it to persist in the long run? Why?
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3. Profit maximization using total cost and total revenue curves Suppose Iyana operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly competitive market structure for cardigans with a market price equal to $25 per cardigan. The following graph shows Iyana's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for cardigans for quantities zero through seven (including zero and seven) that Iyana produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 D 4 5 QUANTITY (Cardigans) Total Cost 6 Total Revenue A Profit
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Calculate Jacques's marginal revenue and marginal cost for the first seven teddy bears 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. 40 35 Marginal Revenue 30 25 Marginal Cost 20 15 10 2 3 4 5 7 8 QUANTITY (Teddy bears) Jacques's profit is maximized when he produces , which is teddy bears. When he does this, the marginal cost of the last teddy bear he produces is than the price Jacques receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is s , which is than the price Jacques receives for each teddy bear he sells. Therefore, Jacques's profit-maximizing quantity corresponds to the intersection of the curves. Because Jacques is a price taker, this last condition can also be written as COSTS AND REVENUE (Dollars per teddy bear)