Homework Help is Here – Start Your Trial Now!
Business
Economics
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.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
Section: Chapter Questions
Problem 3E
See similar textbooks
icon
Related questions
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.
Transcribed Image Text: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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 6 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question

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.
Transcribed Image Text:(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.
Solution
Bartleby Expert
SEE SOLUTION
Knowledge Booster
Short-run Supply Curve
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
Recommended textbooks for you
Managerial Economics: Applications, Strategies an…
Managerial Economics: Applications, Strategies an…
Economics
ISBN:
9781305506381
Author:
James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Economics (MindTap Course List)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Microeconomics
Microeconomics
Economics
ISBN:
9781337617406
Author:
Roger A. Arnold
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS