Astro Computers makes onboard vehicle control computers for the Tesla. The production department has gathered data on the costs of several yearly production levels and asked you to help interpret these for them. 1. The data for Astro appear in the graph below. The COO asks what production level he should set for the coming year, if Astro operates in a perfectly competitive market. (the graph is in the picture)2. Is Astro earning “excess profit” (explain what that means if you think they are) and how other firms will react when they see Astro’s performance?3. The production department has also done a bit of research on other firms operating in the market for onboard control computers. The graph below shows the relative sizes and cost structures of the four largest firms in the market (Data, Astro, Consolidated and BCS); these four firms combined account for 35% of business in the market for onboard control computers. There are over fifteen firms that supply onboard control computers to Tesla and other auto makers. They are standard and uncomplicated to build. 3. **Astro Computers** makes onboard vehicle control computers for Tesla. The production department has gathered data on the costs of several yearly production levels and asked you to help interpret these for them. a. The data for Astro appear in the graph below. The COO asks what production level he should set for the coming year, if Astro operates in a perfectly competitive market.**Graph Explanation:**The graph illustrates cost and production data for Astro Computers. It shows three key cost curves: - **Marginal Cost (MC):** This curve is red and upward sloping. It represents the additional cost of producing one more unit of output.- **Average Total Cost (ATC):** This curve is black and U-shaped. It shows the average cost per unit at different levels of production.- **Average Variable Cost (AVC):** This curve is also black and lies below the ATC. It represents the variable cost per unit.**Quantity (units per year):** The x-axis represents the quantity produced per year, marked at intervals (9,000; 10,000; 13,000; 19,000).**Price (or Cost) Per Unit:** The y-axis represents the cost or price per unit.**Market Price:** There is a green horizontal line representing the market price. In a perfectly competitive market, the firm should produce where the market price equals the marginal cost (MC).**Optimal Production Level:** In such a market, Astro should set production at the quantity where the MC curve intersects the market price line to maximize profits or minimize losses. This intersection denotes the level where producing one more unit would equal the market price.

Since Astro Computer operates in the perfectly competitive industry, they will set production level…

Answered: Astro Computers makes onboard vehicle…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Astro Computers makes onboard vehicle control computers for the Tesla. The production department has gathered data on the costs of several yearly production levels and asked you to help interpret these for them.

1. The data for Astro appear in the graph below. The COO asks what production level he should set for the coming year, if Astro operates in a perfectly competitive market. (the graph is in the picture)

2. Is Astro earning “excess profit” (explain what that means if you think they are) and how other firms will react when they see Astro’s performance?

3. The production department has also done a bit of research on other firms operating in the market for onboard control computers. The graph below shows the relative sizes and cost structures of the four largest firms in the market (Data, Astro, Consolidated and BCS); these four firms combined account for 35% of business in the market for onboard control computers. There are over fifteen firms that supply onboard control computers to Tesla and other auto makers. They are standard and uncomplicated to build.

3. **Astro Computers** makes onboard vehicle control computers for Tesla. The production department has gathered data on the costs of several yearly production levels and asked you to help interpret these for them.

a. The data for Astro appear in the graph below. The COO asks what production level he should set for the coming year, if Astro operates in a perfectly competitive market.

**Graph Explanation:**

The graph illustrates cost and production data for Astro Computers. It shows three key cost curves:

- **Marginal Cost (MC):** This curve is red and upward sloping. It represents the additional cost of producing one more unit of output.

- **Average Total Cost (ATC):** This curve is black and U-shaped. It shows the average cost per unit at different levels of production.

- **Average Variable Cost (AVC):** This curve is also black and lies below the ATC. It represents the variable cost per unit.

**Quantity (units per year):** The x-axis represents the quantity produced per year, marked at intervals (9,000; 10,000; 13,000; 19,000).

**Price (or Cost) Per Unit:** The y-axis represents the cost or price per unit.

**Market Price:** There is a green horizontal line representing the market price. In a perfectly competitive market, the firm should produce where the market price equals the marginal cost (MC).

**Optimal Production Level:** In such a market, Astro should set production at the quantity where the MC curve intersects the market price line to maximize profits or minimize losses. This intersection denotes the level where producing one more unit would equal the market price.

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