As always, make certain you label all axes and curves. Llamaton is a firm in a perfectly competitive, constant-cost industry. Its total cost function is shown below: Units Total Cost 0 $25 1 $28 2 $30 3 $36 4 $48 5 $64 6 $96 (a) What is Llamaton's average fixed cost if it produces 5 units? (b) Explain one way that being in a perfectly competitive market affects Llamaton. (c) If the market price is $12, what is Llamaton's profit-maximizing or loss-minimizing level of output? Explain. (d) Based on your answer to part (c), what is the value of Llamaton's economic profit or loss? (e) Using two completely labeled side-by-side graphs, illustrate how the market sets the short-run demand for Llamaton. (Base your graphs on the perfect competition model, not the prior data.) Label the market equilibrium price Pe and quantity Qe. Label the profit-maximizing quantity for Llamaton Qf. Assume that Llamaton is earning normal profit. (f) Illustrate the short-run effect of a decrease in market demand on your graphs from part (e). Label the new market equilibrium price Pez and quantity Qe2. Label the new profit-maximizing quantity for Llamaton Q+2. Shade completely the area of Llamaton's economic profit or loss. (g) What would happen to this industry in the long run and to Llamaton's economic profit or loss if it stays in the industry? Explain. (h) In two side-by-side graphs, draw a new perfectly competitive market and individual firm experiencing short-run economic profits. Illustrate what will happen to the market in the long run and the impact on the firm's profits. Be sure to completely label your graphs.
As always, make certain you label all axes and curves. Llamaton is a firm in a perfectly competitive, constant-cost industry. Its total cost function is shown below: Units Total Cost 0 $25 1 $28 2 $30 3 $36 4 $48 5 $64 6 $96 (a) What is Llamaton's average fixed cost if it produces 5 units? (b) Explain one way that being in a perfectly competitive market affects Llamaton. (c) If the market price is $12, what is Llamaton's profit-maximizing or loss-minimizing level of output? Explain. (d) Based on your answer to part (c), what is the value of Llamaton's economic profit or loss? (e) Using two completely labeled side-by-side graphs, illustrate how the market sets the short-run demand for Llamaton. (Base your graphs on the perfect competition model, not the prior data.) Label the market equilibrium price Pe and quantity Qe. Label the profit-maximizing quantity for Llamaton Qf. Assume that Llamaton is earning normal profit. (f) Illustrate the short-run effect of a decrease in market demand on your graphs from part (e). Label the new market equilibrium price Pez and quantity Qe2. Label the new profit-maximizing quantity for Llamaton Q+2. Shade completely the area of Llamaton's economic profit or loss. (g) What would happen to this industry in the long run and to Llamaton's economic profit or loss if it stays in the industry? Explain. (h) In two side-by-side graphs, draw a new perfectly competitive market and individual firm experiencing short-run economic profits. Illustrate what will happen to the market in the long run and the impact on the firm's profits. Be sure to completely label your graphs.
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter9: Quadratic Functions And Equations
Section: Chapter Questions
Problem 4PT
Related questions
Question
Answer all parts please and all graphs to be hand drawn please thank you.
Transcribed Image Text:As always, make certain you label all axes and curves.
Llamaton is a firm in a perfectly competitive, constant-cost industry. Its total cost function is shown below:
Units
Total Cost
0
$25
1
$28
2
$30
3
$36
4
$48
5
$64
6
$96
Transcribed Image Text:(a) What is Llamaton's average fixed cost if it produces 5 units?
(b) Explain one way that being in a perfectly competitive market affects Llamaton.
(c) If the market price is $12, what is Llamaton's profit-maximizing or loss-minimizing level of output?
Explain.
(d) Based on your answer to part (c), what is the value of Llamaton's economic profit or loss?
(e) Using two completely labeled side-by-side graphs, illustrate how the market sets the short-run demand
for Llamaton. (Base your graphs on the perfect competition model, not the prior data.) Label the market
equilibrium price Pe and quantity Qe. Label the profit-maximizing quantity for Llamaton Qf. Assume that
Llamaton is earning normal profit.
(f) Illustrate the short-run effect of a decrease in market demand on your graphs from part (e). Label the
new market equilibrium price Pez and quantity Qe2. Label the new profit-maximizing quantity for Llamaton
Q+2. Shade completely the area of Llamaton's economic profit or loss.
(g) What would happen to this industry in the long run and to Llamaton's economic profit or loss if it stays
in the industry? Explain.
(h) In two side-by-side graphs, draw a new perfectly competitive market and individual firm experiencing
short-run economic profits. Illustrate what will happen to the market in the long run and the impact on the
firm's profits. Be sure to completely label your graphs.
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