Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below.  What is the equilibrium price and quantity given this information on demand in the market? Is each firm making a profit or loss? What is the amount of that profit or loss? What do you predict will happen over the long run?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
  1. Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below. 

What is the equilibrium price and quantity given this information on demand in the market?

Is each firm making a profit or loss?

What is the amount of that profit or loss? What do you predict will happen over the long run? 

 

Table showing Market Demand
Price
Quantity Demanded Quantity Supplied
$90
20
$65
30
$45
40
$35
50
$25
60
$15
70
$10
80
%24
Transcribed Image Text:Table showing Market Demand Price Quantity Demanded Quantity Supplied $90 20 $65 30 $45 40 $35 50 $25 60 $15 70 $10 80 %24
Table showing Total Cost and Quantity of Output
Output
Total Cost
Marginal Cost
Average Total
100
1
120
20
120
2
135
15
67.5
3
145
10
48.3
160
15
40
5
180
20
36
6
205
25
34.2
7
240
35
34.3
8
285
45
35.6
9
350
65
38.9
10
440
90
44
4-
Transcribed Image Text:Table showing Total Cost and Quantity of Output Output Total Cost Marginal Cost Average Total 100 1 120 20 120 2 135 15 67.5 3 145 10 48.3 160 15 40 5 180 20 36 6 205 25 34.2 7 240 35 34.3 8 285 45 35.6 9 350 65 38.9 10 440 90 44 4-
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Multiplicative Exponential demand Model
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education