Fill in the columns in the following table. What quantity should a profit-maximizing firm produce? Verify your answers with marginal reasoning. TFC TVC MC Price TR TC Profit $10 $0 $20 1 10 12 20 2 10 20 20 3 10 25 20 4 10 40 20 5 10 65 20 10 100 20 6
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- 3. The components of marginal revenue Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced seven trucks, but then decided to increase production to eight trucks. The following graph gives the demand curve faced by Jabari's Hook NLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $100,000 to $50,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial seven engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. PRICE (Thousands of dollars per fire engine) 275 250 225 200…how do you solve for profit to get optimal level for both firms and optimal selling price?coit ad Fifai oriens diss ܠܫܐ -D. Prufe maximirudcn uni hharat-ade mariet prioris ܗ ܕ Sapietne Sarei nuts a imal haats that manum: a Are a e $$ gar Hat The following graph shows Dames total cost curve Use the blue points (circle symbel) to plot total revenue and the green points (triangle symbol) to plat profft for shirts quanties zero through sever (inclusive) that Darnell produces A< ¥UAnd 10 Tripl ܡܢܐ ܕ ܚ ܠܚܝܬ Total Co ܀ ܀
- O See Hint The graph below shows the marginal cost curve for two firms, A and B. Assuming these two firms together completely dominate their market, draw the market supply curve. Use the straight-line tool, and set the endpoints of the line based on the endpoints of the two given lines. To refer to the graphing tutorial for this question type, please click here. Price and marginal cost 160 150 140 130 120 110 100 80 70 60 50 40 30 20 10 160 る ろ 8さ88るるる Quantity supplied (thousands)Quantity TR MR TC MC 0 0 - 5 - 1 10 2 2 20 15 3 30 10 4 10 37 Complete the following table and identify the quantity that maximize profitUse the following diagram to answer this question. This firm will have a profit per unit of Price 9.50 10 8 6.50 - 5 O $1.50 O $3.00 $4.50 $5.00 7,000+ 8,000 MR 10,000 MC ATC AVC AR-D Quantity of Widgets
- Suppose that the market for candles 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. PRICE (Dollars per candle) 8 2 2 3 2 8 36 32 28 24 20 4 0 0 MC 2 ATC AVC 6 4 8 10 12 14 16 QUANTITY (Thousands of candles per day) 18 20 Profit or Loss In the short run, at a market price of $20 per candle, this firm will choose to produce On the preceding graph, use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss if the market price is $20 and the firm chooses to produce the quantity you already selected. OL candles per day. a n WSuppose Musashi runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $25 per shirt. The following graph shows Musashi'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 Musashi produces. 200 175 Total Revenue 150 Total Cost 125 Profit 100 75 50 25 -25 1 2 3 7 QUANTITY (Shirts) TOTAL COST AND REVENUE (Dollars) co3. Johnny Rockabilly has just finished recording his latest CD. His record company's marketing department determines that the demand for the CD is as follows: Price Number of CDs $24 10 000 22 20 000 20 20 30 000 18 40 000 16 50 000 14 60 000 The company can produce the CD with no fixed cost and a variable cost of $5 per CD. a. Find total revenue for quantity equal to 10 000, 20 000, and so on. What is the marginal revenue for each 10 000 increase in the quantity sold? b. What quantity of CDs would maximize profit? What would be the price? What would be the profit? c. If you were Johnny's agent, what recording fee would you advise Johnny to demand from the record company? Why?
- 16 5 Use the table below to answer questions about Christina's Christmas Wreaths. Christina operates in a perfectly competitive market for wreaths. Christina's Costs and Revenue Quantity Average Variable (wreaths) Cost (dollars) 5 $14.00 6 - 15.00 7 CALL/M 16.00 8 22.00 9 28.00 10 34.00 wreaths Average Total Cost (dollars) $24.00 23.00 23.00 28.00 34.00 39.00 $ Instructions: In part a, enter your answer as a whole number. In parts b and c, round your answers to two decimal places. a. What is the profit-maximizing level of output for Christina's Christmas Wreaths? Marginal Cost (dollars) $20.00 b. What is the profit per unit if the profit-maximizing level of output is produced? $ olo L c. What is the total economic profit generated by producing the profit-maximizing output? $ % Marginal Revenue (dollars) $63.00 63.00 63.00 63.00 63.00 63.00 22.00 23.00 BIEL 63.00 82.00 TAO 84.00Use the graph below to estimate the firm's approximate short run economic profit (assuming the firm maximizes profit). 7 MC АТC AVC MR 1 1 2 Quantity -1 -1.1 -1.2 PriceSuppose Eileen 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 Eileen'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 Eileen produces. 200 175 Total Revenue 150 125 Total Cost Profit 100 50 25 -25 1 3 4 6 7 QUANTITY (Shirts) Calculate Eileen's marginal revenue and marginal cost for the first seven shirts she produces, 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. (?) 40 Marginal Revenue Marginal Cost 1. 5 6 7 8 QUANTITY (Shirts) Eileen's profit is maximized when she produces shirts. When she does this, the marginal cost of the last shirt she produces is $ which is v than the price Eileen receives…