EXERCISE NO. 7 SCORE. RATING: NAME:. SECTION: A firm's cost curves are given by the following table: EXERCISES Q TC TFC TVC AVC ATC MC 0 P100 100 1 130 100 2 150 100 3 160 100 4 172 100 5 185 100 6 210 100 7 240 100 8 280 100 9 330 100 10 390 100 1. Complete the table. 2. Graph AVC, ATC, and MC on the same graph. 3. Suppose the market price is P30.00. How much will the firm produce in the short-run? How much are total profits? 4. Suppose the market price is P50.00. How much will the firm produce in the short-run? What are the total profits? 5. Suppose the market price is P10.00. How much would the firm produce in the short-run? What are total profits? 131

EXERCISE NO. 7 SCORE. RATING: NAME:. SECTION: A firm's cost curves are given by the following table: EXERCISES Q TC TFC TVC AVC ATC MC 0 P100 100 1 130 100 2 150 100 3 160 100 4 172 100 5 185 100 6 210 100 7 240 100 8 280 100 9 330 100 10 390 100 1. Complete the table. 2. Graph AVC, ATC, and MC on the same graph. 3. Suppose the market price is P30.00. How much will the firm produce in the short-run? How much are total profits? 4. Suppose the market price is P50.00. How much will the firm produce in the short-run? What are the total profits? 5. Suppose the market price is P10.00. How much would the firm produce in the short-run? What are total profits? 131

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.7IP

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(1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…
This is a graph of our firm’s costs. Label the lines on the graph using the following labels: average fixed cost (AFC), average variable cost (AVC), average total cost (ATC) marginal cost (MC). Then label the shut down and breakeven points on the graph.
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