Consider the following demand and cost information on a perfectly competitive firm in the short run: Price per unit (in dollars) Quantity Total Cost (in pounds) (in dollars) 5 7 5 1 17 2 24 3 26 4 29 5 5 33 5 6 38 5 7 44 5 8. 52 What is the profit-maximizing/loss-minimizing output of the firm? What is the amount of the profit/loss? Suppose a perfectly competitive firm in the short run faces an industry price of $10 per unit and its marginal revenue is equal to rising marginal cost at an output of 150 units. The firm's total cost is $2000 and total fixed cost is $900. I. How much output should the firm produce? Explain briefly Suppose fixed costs double to $1800. Should the firm shut down? Explain briefly. II.

Consider the following demand and cost information on a perfectly competitive firm in the short run: Price per unit (in dollars) Quantity Total Cost (in pounds) (in dollars) 5 7 5 1 17 2 24 3 26 4 29 5 5 33 5 6 38 5 7 44 5 8. 52 What is the profit-maximizing/loss-minimizing output of the firm? What is the amount of the profit/loss? Suppose a perfectly competitive firm in the short run faces an industry price of $10 per unit and its marginal revenue is equal to rising marginal cost at an output of 150 units. The firm's total cost is $2000 and total fixed cost is $900. I. How much output should the firm produce? Explain briefly Suppose fixed costs double to $1800. Should the firm shut down? Explain briefly. II.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The graph below shows a perfectly competitive firm in short run equilibrium, where the firm has chosen the output level maximizing its profit. Consider the level of profits being earned here, and what will happen over time. What will happen in the long run? Note that the horizontal demand curve, D1, is also equivalent to marginal revenue and price. Group of answer choices The market price will increase causing economic profits to increase Demand will increase causing economic profits to increase The market price will decrease until economic profit is zero
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Consider the perfectly competitive market for copper. Assume that, regardless of how many firms are in the Industry, every firm in the industry is Identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per pound) PRICE (Dollars per por 100 90 80 70 60 50 40 30 20 100 10 50 0 80 70 60 50 40 30 20 10 0 The following diagram shows the market demand for copper. 0 Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the Industry supply curve.) Next, use the purple points (diamond symbol) to plat the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run Industry supply curve when there are 40 firms. MC D 0 5 10 ATC H AVC D 0 15…
You are given the following information for a producer of organic grommets in a perfectly competitive market. TFC = $8 Market price = $13 Quantity MC ($) 1 10 2 8 3 9 4 11 5 14 6 18 The marginal cost of production appears in the table above. What is the profit-maximizing output? Is the firm making a profit or loss? How much?
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Assume that a firm in a perfectly competitive industry has the following total cost schedule: Calculate a marginal cost and an average cost schedule for the firm to complete the following table. Output Total Cost Marginal Cost Average Cost (units) ($) ($) ($) 10 440 15 600 20 720 25 900 30 1,200 35 1,540 40 1,920 If the prevailing market price is $68 per unit, units will be produced. Profits per unit will be and total profits will be . Is the industry in long-run equilibrium at this price? No Yes