The table below shows the total costs faced by Faizah's Manufacturing Firm for different quantities of Good G sold. Quantity Total Cost 0 $64 1 $79 $98 $120 $145 $171 $198 $228 $262 $305 $353 2 3 4 5 6 7 8 9 10 Faizah's Manufacturing Firm sells Good G in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $32 per unit. (a) Calculate the average fixed cost of producing 8 units. Show your work. (b) Identify the profit-maximizing quantity. Explain using marginal analysis. (c) Calculate the economic profit at the profit-maximizing quantity you identified in part (b). Show your work.

The table below shows the total costs faced by Faizah's Manufacturing Firm for different quantities of Good G sold. Quantity Total Cost 0 $64 1 $79 $98 $120 $145 $171 $198 $228 $262 $305 $353 2 3 4 5 6 7 8 9 10 Faizah's Manufacturing Firm sells Good G in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply curve. The market price is $32 per unit. (a) Calculate the average fixed cost of producing 8 units. Show your work. (b) Identify the profit-maximizing quantity. Explain using marginal analysis. (c) Calculate the economic profit at the profit-maximizing quantity you identified in part (b). Show your work.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The table below shows the total costs faced by Faizah's Manufacturing Firm for different quantities of Good G sold.
Quantity
0
1
2
3
4
5
6
7
8
9
10
Total Cost
$64
$79
$98
$120
$145
$171
$198
$228
$262
$305
$353
Faizah's Manufacturing Firm sells Good G in a perfectly competitive market with a downward-sloping demand curve and an upward-sloping supply
curve. The market price is $32 per unit.
(a) Calculate the average fixed cost of producing 8 units. Show your work.
(b) Identify the profit-maximizing quantity. Explain using marginal analysis.
(c) Calculate the economic profit at the profit-maximizing quantity you identified in part (b). Show your work.

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Step 1: Intro

Step 2: Part a

Step 3: Part b

Step 4: cont.

Step 5: Part c

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other three parts

(d) Based on your answer to part (c), will the number of firms in the industry increase, decrease, or stay the same in the long run? Explain.
(e) Based on your answer to part (c), will the market price increase, decrease, or stay the same in the long run? Explain.
(f) The income elasticity of demand for Good G is -3, and the cross-price elasticity of demand for gizmos with respect to the price of Good G is 0.1.
Based on your answer to part (e), what will happen to the demand for gizmos? Explain.
(g) Now assume that the market in which Faizah's Manufacturing Firm operates is in long-run equilibrium at a price of $35 per unit.
(i) Suppose the government imposes a price floor at $30 per unit on the market for Good G. Will consumer surplus in the market for Good G
increase, decrease, or stay the same in the short run as a result of the price floor? Explain.
(ii) Suppose instead the cost of energy, a variable cost for Faizah's Manufacturing Firm, decreases. Will the profit-maximizing quantity of Good G for
Faizah's Manufacturing Firm increase, decrease, or stay the same in the short run? Explain.

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