EXAMPLE: Paulo's Ping Pong Balls Is a firm that operates in a competitive market. The ping pong balls sell for $3 per package. Fill in the following table and determine the profit-maximizing level of output:

EXAMPLE: Paulo's Ping Pong Balls Is a firm that operates in a competitive market. The ping pong balls sell for $3 per package. Fill in the following table and determine the profit-maximizing level of output:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the graph. What is the value of profit when this firm is maximizing profit? Enter the number below. P P*=$10 ATC* = $6 B A q*=10 MC ATC MR q = firm quantity
The following graph illustrates the demand and marginal revenue curve (D-MR) of a perfectly competitive firm. Suppose that when the firm produces 40 units, its average variable cost equals $65 per unit and its average total cost equals $80 per unit. Use the green rectangle (triangle symbols) to plot the total cost of producing 40 units. Next, use the grey rectangle (star symbols) to plot the total variable cost of producing 40 units. Then, use the tan rectangle (dash symbols) to plot the total revenue at 40 units. Finally, use the purple rectangle (diamond symbols) to plot the profit or loss at 40 units. PRICE AND COST (Dollars) 100 90 80 70 60 50 40 30 20 10 0 0 10 + 20 +ATC + AVC 30 40 50 60 QUANTITY (Units) 70 80 D=MR 90 H 100 Total Cost Total Variable Cost I Total Revenue Profit or Loss ?
10. Figure 5 shows the graph of the short-run cost curves for Tim-T-Shirts, a firm operating in a perfectly competitive market. P* denotes the current price for Tim T-Shirts. Based on the information in the graph, which of the following should we expect in the long run? a) New firms will enter the market. b) The number of firms in the market will remain unchanged. c) Gray Sweaters will increase the current price of sweaters. d) There is not enough information to answer the question. Figure 5 Price and Costs P* MC ATC AVC Quantity
Suppose that you have a management job at a firm like Estrella River Ranch, a beautiful vineyard and one of more than 200 vineyards growing cabernet sauvignon grapes in California. Assume that the market is perfectly competitive. Also, assume that you cannot instantly change production when demand changes, and grapes cannot be stored, so your firm must sell all of the grapes it grows. The adjacent figure (Figure A) shows the situation at your California vineyard. If demand is high, the price is $3,000 per ton of grapes, and if the price is low, the price is $1,000 per ton of grapes. Producing 300 tons of grapes maximizes your firm's expected profit. Suppose that there is no fixed cost. If demand is high and your firm produces 300 tons of grapes, its economic profit on the tons of grapes between 100 and 300 tons is $ If demand is low and your firm produces 300 tons of grapes, its economic loss on the tons of grapes between 100 and 300 tons is dollars. (Enter a negtive sign to indicate a…
Avocados have been proven to bring many health benefits if consumed regularly. Many others including Gavin are huge fans of avocados and have plans to start a new business selling avocados. Assume the market for avocados to be perfectly competitive. Answer the following questions: a. If these firms are able to continue entering the market for avocados, it is likely that they are earning an economic profit. In order to earn an economic profit, firms must ensure that the price is above its Type ATC for Average Total Cost, AVC for Average Variable Cost, TC for Total Cost or VC for Variable Cost. b. Gavin decided to build an avocado farm in Brisbane. It is estimated that Gavin will need to spend $14.55 thousand on farming equipment costs. Gavin will also need to spend $20.95 thousand on labour and overhead costs. However, it is expected that Gavin will be able to sell 5 tonnes of avocados and gain revenue of $47.66 thousand from selling these avocados. Calculate the thousand. Answer to the…
Suppose the market for peaches is perfectly competitive. The short-run average total cost and marginal cost of growing peaches for an individual grower are illustrated in the figure to the right. Assume that the market price for peaches is $30.00 per box. What is the profit-maximizing quantity for peach growers to produce? boxes. (Enter your response as an integer.) At this level of output, profit will be $. (Enter your response rounded to the nearest dollar.) Peach growers will earn positive economic profit in the short run at any market price above $ per box. (Enter your response rounded to one decimal place.) Price (dollars per box) 40- 36- 32- 28- 24 20 16- 12- 8 4- 10 MC 20 30 40 50 60 70 80 Output (boxes of peaches per day) ▬▬ ATC 90 100 Q
Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. Price Quantity Produce or Shut Down? Profit or Loss? (Dollars per jacket) (Jackets) 4 8 12 36 48 60 On the following graph, use the orange points (square…
Farmer Jones grows sugar. The total revenue, marginal revenue, total cost, and marginal cost of producing various quantities of sugar (bushels in 1000s) are presented in the table below Marginal Output (bushels in 1000s) Total Revenue Marginal Total Revenue Cost Cost 0 $0 0 1 86 86 120 120 2 172 86 200 80 258 86 240 40 344 86 320 80 5 430 86 480 160 516 86 680 200 Suppose the market for sugar is perfectly competitive. To maximize profits, farmer Jones should produce At that level of output, farmer Jones will earn profit of S thousand bushels of sugar. (Enter a numeric response using an integer)
The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 20 1.00 25 2.00 1.20 30 2.46 1.41 35 3.51 1.71 40 4.11 2.01 45 5.43 2.39 50 5.99 2.75 55 8.47 3.27 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? 2$ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? 2$
Calculate Iyana's marginal revenue and marginal cost for the first seven cardigans they produce, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity. COSTS AND REVENUE (Dollars per cardigan) 40 35 30 25 20 15 10 50 0 1 2 4 3 5 QUANTITY (Cardigans) 6 7 8 Marginal Revenue Marginal Cost Iyana's profit is maximized when they produce a total of cardigans. At this quantity, the marginal cost of the final cardigan they produce is , an amount than the price received for each cardigan they sell. At this point, the marginal cost of producing one more cardigan (the first cardigan beyond the profit maximizing quantity) is S an amount than the price received for each cardigan they sell. Therefore, Iyana's profit-maximizing quantity occurs at the point of intersection between the curves. Because Iyana is a price taker, the previous condition is equivalent to
Suppose Madison operates a handicraft pop-up retail shop that sells rompers. Assume a perfectly competitive market structure for rompers with a market price equal to $20 per romper. The following graph shows Madison's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for rompers for quantities zero through seven (including zero and seven) that Madison produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 0 -25 □ 0 ☐ 1 2 3 5 QUANTITY (Rompers) 4 6 Total Cost 7 8 o Total Revenue Profit
Am. 106.