Figure 16-12100 Price9080MCATC7058 6050403630 +2010 +MR4812 16 20,24 28 32 Buaxtityc)Does the firm minimize cost? Why or why not? How muchexcess capacity does this firm have?

Marginal revenue curve lies below the demand curve because the seller has to decrease the price in…

Answered: Figure 16-12 Price 100 90 80 MC 'ATC 70…

Figure 16-12 Price 100 90 80 MC 'ATC 70 Fog 85 50 + 40 + 36 30 + 20 10 + MR 4 12 16 20,24 28 32 Buantity Does the firm minimize cost? Why or why not? How much excess capacity does this firm have? c)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Figure 16-12
100 Price
90
80
MC
ATC
70
58 60
50
40
36
30 +
20
10 +
MR
4
8
12 16 20,24 28 32 Buaxtity
c)
Does the firm minimize cost? Why or why not? How much
excess capacity does this firm have?

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ο ο ο ο ο Refer Price 50 $30 20 10 Figure 21-9 20 MC 60 ATC AVC 40 Quantity to Figure 21-9. Calculate the firm's approximate total cost when average total cost is at a minimum. O a. $100 O b. $160 OC. $480 d. $600 80
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3. Profit maximization using total cost and total revenue curves Suppose Kenji runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Kenji's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven (inclusive) that Kenji produces. 200 175 Total Revenue 150 Total Cost 125 Profit 100 -25 1 2. TOTAL COST AND REVENUE (Dollars)
need d and e rest part are solved answer is here Solution:- Given Monthly demand function: Q=300-4P .... (1) Cost function: TC=15Q+1000 ..... (2) Part a Revenue = Price * quantity Q=300-4P⇒4P=300-Q⇒P=75-0.25Q So R=PQR=75-0.25QQR=75Q-0.25Q2 ... (3) To maximize revenue, differentiate the equation 3 with respect to Q dRdQ=75-0.5Q Put dRdQ=075-0.5Q=0⇒0.5Q=75⇒Q=150 Second-order condition for revenue maximization: d2RdQ2=-0.5<0 Revenue is maximization quantity is 150 From equation 3 R=75×150-0.25×1502R=5625 The maximum revenue is $5625 part b Differentiate equation 1 with respect to Q dQdP=-4 Price elasticity is calculated as e=dQdP×PQe=-4×75-0.25×150150e=-4×0.25e=-1 Price elasticity at revenue-maximizing point is -1 part c Total cost of producing 150 units: TC=15×150+1000TC=3250 Profit at revenue-maximizing level of output: Profit = revenue - costProfit =5625-3250Profit =2375
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37)
1. Consider a firm with the following cost and inverse demand functions. Cost($) 20 3 Cost Function N 3 quantity Price($) 16 13 30 10 Inverse Demand quantity (a) What are the average costs of producing 1, 2, and 3 units for this firm? (b) What are the marginal costs of producing first, second, and third units for this firm? (c) Does this firm enjoy either economies or diseconomies of scale? (d) What are the profits of producing 1, 2, and 3 units for this firm? (e) When does the firm maximize its profit? Select from producing 1, 2, and 3 units.