(Figure: Profit-Maximization for Fabulous Finn's Flower Firm in the Short Run) Use Figure: Profit- Maximization for Fabulous Finn's Flower Firm in the Short Run. The MC curve is represented by: Price, ATC, AVC, and MC (per unit) P P₁ c) P₂ a) curve N b) d) none of the curves. curve O 91 92 93 curve M 94 95 Quantity (per period)

(Figure: Profit-Maximization for Fabulous Finn's Flower Firm in the Short Run) Use Figure: Profit- Maximization for Fabulous Finn's Flower Firm in the Short Run. The MC curve is represented by: Price, ATC, AVC, and MC (per unit) P P₁ c) P₂ a) curve N b) d) none of the curves. curve O 91 92 93 curve M 94 95 Quantity (per period)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Deriving the short-run supply curve The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for sun lamps. 100 90 80 70 60 50 ATC 40 30 20 10 0 0 5 AVC MOD 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of lamps) For every price level given in the following table, use the graph to determine the profit-maximizing quantity of lamps for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero lamps and the profit-maximizing quantity of lamps.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. Price (Dollars per lamp) 10 20 32 40 50 60 Quantity (Lamps) Produce or Shut Down? Profit or Loss? On the following graph, use the orange points (square…
(Figure: Joshua's Lawn Mowing Business) Use Figure: Joshua's Lawn Mowing Business. If Joshua's lawn mowing firm's units of output, and its economic profit will be MR curve is MR2, then the firm's optimal output is Price, MR, MC, ATC, AVC Q₁ Q₁; positive Q2; negative Q3; positive Q4; negative √ Q₂ Q3 MC ATC MR₁ AVC MR₂ Q4 Lawns mowed
3. Profit maximization using total cost and total revenue curves Suppose Raphael 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 Raphael's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Raphael produces, including zero shirts. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 25 0 -25 0 1 2 ♫ 3 4 5 QUANTITY (Shirts) 6 Total Cost ☐ 7 8 Total Revenue Profit ?
3. Profit maximization in the cost-curve diagram Suppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 100 90 Profit or Loss 80 70 ATC 60 50 40 30 AVC 20 MC 10 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pans per day) In the short run, at a market price of $50 per pan, this firm will choose to produce 37,500 pans per day. PRICE (Dollars perpan)
3. Profit maximization using total cost and total revenue curves Suppose Yakov runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Yakov's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Yakov produces. Yakov's profit is maximized when he produces teddy bears. When he does this, the marginal cost of the last teddy bear he produces is , which is ___ than the price Yakov receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is , which is than the price Yakov receives for each teddy bear he sells. Therefore, Yakov's profit-maximizing quantity corresponds to the intersection of the…
Question 3 please
3. The components of marginal revenue Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $80,000 to $60,000 per fire engine. Note that while Sean gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $60,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $60,000. PRICE (Thousands of dollars per fire engine) Sean 100 90 80 70 40 10 ++ 0 0 1 True + 2 False 3 4 5 QUANTITY…
Question 4 please
Question 1 please
3. The components of marginal revenue Dmitri's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Dmitri produced four fire engines, but he has decided to increase production to five fire engines. The following graph shows the demand curve Dmitri faces. As you can see, to sell the additional engine, Dmitri must lower his price from $105,000 to $90,000 per fire engine. Note that although Dmitri gains revenue from the additional engine he sells, he also loses revenue from the initial four engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial four engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000. 150 135 Revenue Lo 120 Demand 105 80 Revenue Gained PRICE (Thousands of dollars per fe engine 228…
22. Suppose the firm in the figure below sets a uniform price for its product. Please show the steps. a. If the firm chooses to set a uniform price for its product, then the profit-maximizing price is $________ and ________ units will be sold. Under this uniform pricing policy, the maximum possible profit is $________. b. The maximum profit the firm could earn if the firm sells 2,000 units and is able to charge the demand price for every one of the 2,000 units it sells is $ ________. c. For the additional number of units sold by expanding output to 2,000 units (from the output level in part a), the consumer surplus that could be captured if it were possible to charge the demand price on every one of those units would amount to $________.
5. Profit maximization and shutting down in the short run The following graph plots daily cost curves for a firm operating in the competitive market for rompers. PRICE (Dollars per romper) 50 45 40 35 30 25 20 15 10 5 0 0 2 MC 27.50 45.00 4 ATC AVC 6 8 10 12 14 QUANTITY (Thousands of rompers) 16 Price Quantity (Dollars per romper) (Rompers) 12.50 18 20 Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) ? Total Revenue (Dollars) Fixed Cost Variable Cost (Dollars) (Dollars) 135,000 135,000 135,000 Profit (Dollars) If the firm shuts down, it must incur its fixed costs (FC)…