Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. Output TC 25,000 50,000 $100,000 MC $0.50 150,000 1.00 75,000 187,500 2.50 100,000 275,000 3.00 a. What is ATC per unit for each level of output listed in the table? Instructions: Round your answers to two decimal places. Output TC MC ATC 25,000 $100,000 $0.50 $ 50,000 150,000 1.00 $ 75,000 187,500 2.50 $ 100,000 275,500 3.00 $ b. Is this a decreasing-cost industry? (Click to select) c. Suppose that the market price for a bottle of vitamins is $2.50 and that at that price the total market quantity demanded is 75,000,000 bottles. How many firms will there be in this industry? firm(s) d. Suppose that, instead, the market quantity demanded at a price of $2.50 is only 75,000. How many firms do you expect there to be in this industry? firm(s)
Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. Output TC 25,000 50,000 $100,000 MC $0.50 150,000 1.00 75,000 187,500 2.50 100,000 275,000 3.00 a. What is ATC per unit for each level of output listed in the table? Instructions: Round your answers to two decimal places. Output TC MC ATC 25,000 $100,000 $0.50 $ 50,000 150,000 1.00 $ 75,000 187,500 2.50 $ 100,000 275,500 3.00 $ b. Is this a decreasing-cost industry? (Click to select) c. Suppose that the market price for a bottle of vitamins is $2.50 and that at that price the total market quantity demanded is 75,000,000 bottles. How many firms will there be in this industry? firm(s) d. Suppose that, instead, the market quantity demanded at a price of $2.50 is only 75,000. How many firms do you expect there to be in this industry? firm(s)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following
table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit.
Output
TC
25,000
50,000
$100,000
MC
$0.50
150,000
1.00
75,000
187,500
2.50
100,000
275,000
3.00
a. What is ATC per unit for each level of output listed in the table?
Instructions: Round your answers to two decimal places.
Output
TC
MC
ATC
25,000
$100,000
$0.50
$
50,000
150,000
1.00
$
75,000
187,500
2.50
$
100,000
275,500
3.00
$
b. Is this a decreasing-cost industry?
(Click to select)
c. Suppose that the market price for a bottle of vitamins is $2.50 and that at that price the total market quantity demanded is
75,000,000 bottles. How many firms will there be in this industry?
firm(s)
d. Suppose that, instead, the market quantity demanded at a price of $2.50 is only 75,000. How many firms do you expect there to be
in this industry?
firm(s)
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