For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at thatquantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing andshutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on averagevariable cost.)Price(Dollars per pan)25.0070.00100.00Quantity(Pans)Total Revenue(Dollars)Fixed Cost(Dollars)1,600,0001,600,0001,600,000Variable Cost(Dollars)Profit(Dollars)If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if itshuts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease).This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-isper pan. 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.PRICE (Dollars per pan)1009080706050403020100+0O5MCATCAVC10 15 20 25 30 35QUANTITY (Thousands of pans)404550?

Total Revenue (TR) is determined by increasing the given price function with the quantity as…

For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) Price (Dollars per pan) 25.00 70.00 100.00 Quantity (Pans) Total Revenue (Dollars) Fixed Cost Variable Cost (Dollars) (Dollars) 1,600,000 1,600,000 1,600,000 Profit (Dollars) If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it shuts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per pan.

For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) Price (Dollars per pan) 25.00 70.00 100.00 Quantity (Pans) Total Revenue (Dollars) Fixed Cost Variable Cost (Dollars) (Dollars) 1,600,000 1,600,000 1,600,000 Profit (Dollars) If the firm shuts down, it must incur its fixed costs (FC) in the short run. In this case, the firm's fixed cost is $1,600,000 per day. In other words, if it shuts down, the firm would suffer losses of $1,600,000 per day until its fixed costs end (such as the expiration of a building lease). This firm's shutdown price-that is, the price below which it is optimal for the firm to shut down-is per pan.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Month (m): 4 Day (d): 1 Use the two numbers above, m and d, to complete the cost function for a perfectly competitive firm: Cost (q) = m q2 + d = (30) For a cost function like yours, Marginal Cost (MC) = 2 m q . Specifically, what are the following for the cost function you wrote out above? Fixed Cost = Average Total Cost = Cost (q)/q = Variable Cost = Average Fixed Cost = FC/q = Marginal Cost = 2 m q = Average Variable Cost = VC/q = (15) Fill in the table with your values from your cost function. q Total Cost AVC AFC ATC MC 0 0 0 -- -- -- 1 2 3 4 5 6
6
Douglas Fur is a small manufacturer of fake-fur boots in San Diego. The following table shows the company’s total cost of production at various production quantities. On the following graph, plot Douglas Fur’s average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $210, so you should start your ATC curve by placing a green point at (1, 210). For MC, plot the points between the integers: For example, the MC of increasing production from zero to one pair of boots is $90, so you should start your MC curve by placing an orange square at (0.5, 90).) Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
The table below represents incomplete information on the short-run production costs for a firm, where: FC is fixed cost; TVC is total variable cost; TC is total cost; MC is marginal cost; and AFC, AVC, and ATC are average fixed, average variable, and average total cost, respectively. Based on the information provided in the table, complete the rest of the table. Note that values for FC, TVC, TC, AFC, AVC, and ATC should be placed on the same line as the corresponding quantity; values for MC should be placed between quantities. For example, the marginal cost of increasing output from 2 units to 3 units is $110, thus $110 is entered between Q=2 and Q=3 in the table. Find the quantity at which diminishing marginal returns set in. TVC TC Q 1 FC MC AFC AVC ATC 400 300 2 920 110 3 4 180 5 272
4. Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Francisco. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Average Variable Cost (Dollars per pair) Average Total Cost (Dollars per pair) Quantity Total Cost Marginal Cost Fixed Cost Variable Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars) 120 1 210 2 270 3 315 4 380 5 475 630
The Mini-Case "Economies of Scale at Google describes economies of scale for Google Cloud Storage. The cost function for this service is well-approximated by K C(q)-F+cq where C is total cost, F is fixed cost, c is a constant and q is output. What is marginal cost for this cost function? What are the average fixed cost, average variable cost, and average cost? Over what range of output does Google have economies of scale? The marginal cost function (MC) is The average fixed cost function (AFC) is AFC- The average variable cost function (AVC) is AVC- MC-C The average cost function (AC) is AC- (Property format your expressions using the tools in the palette. Hover over tools to see keyboard shortcuts. Eg, a fraction can be created with the character) Time Remaining: 02.09.09
What is the average total cost of producing 300 LCD screens?
Suppose that the Acme Gumball Company has a fixed proportions production function that requires it to use two gumball presses and one worker to produce 1,000 gumballs per hour. a. Explain why the cost per hour of producing 1,000 gumballs is 2v + w (where v is the hourly rent for gumball presses and w is the hourly wage). b. Assume Acme can produce any number of gumballs they want using this technology. Explain why the cost function in this case would be TC = q(2v +w), where q is output of gumballs per hour, measured in thousands of gumballs. c. What is the average and marginal cost of gumball production (again, measure output in thousands of gumballs)? (show the complete formula) Draw the graph for the average and marginal cost curves for gumballs assuming v=3, w-5 (show working) Now draw the graph for these curves for v=6, w=5.( show working) Explain why these curves have shifted.
Suppose that the market for microwave ovens is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per oven) 100 90 80 70 40 30 20 10 0 0 5 0 MC ATC AVC 10 15 20 25 30 35 QUANTITY (Thousands of ovens) 40 45 50 (?)
Problem 05-06 A firm's fixed costs for 0 units of output and its average total cost of producing different output levels are summarized in the table below. Complete the table to find the fixed cost, variable cost, total cost, average fixed cost, average variable cost, and marginal cost at all relevant levels of output. Instruction: Enter your responses for Average Fixed Cost (AFC) and Average Variable Cost (AVC) rounded to two decimal places. All other responses should be entered as whole numbers. If you are entering a negative number, use a negative sign (-) where appropriate. Q AVC ATC MC 150 300 75 200 H50 175 225 30 325 25 400 FC VC TC AFC 0 $ 15,000 0 100 15000 200 15000 300 15000 400 15000 500 15000 600 15000
6. Firm's Costs 2 Consider the following cost information for a pizzeria: Quantity Total Cost Variable Cost (Dozens of pizzas) (Dollars) (Dollars) 280 1 320 40 2 350 70 3 380 100 4 420 140 470 190 6 530 250 The pizzeria's fixed cost is Complete the third column of the following table by calculating the marginal cost per dozen pizzas using the information on total cost. Then complete the final column by calculating the marginal cost per dozen pizzas using the information on variable cost. Quantity Total Cost Marginal Cost Variable Cost Marginal Cost Using Total Cost (Dollars) Using Variable Cost (Dollars) (Dozens of pizzas) (Dollars) (Dollars) 280 320 40 350 70 AA
4. Variouss measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Diego. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost (Dollars) Fixed Cost Variable Cost Average Variable Cost Average Total Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars per pair) (Dollars per pair) 120 1 200 2 240 3 285 4 340 425 6 540 On the following graph, plot Douglas Fur's average total cost (ATC) curve using the green points (triangle symbol). Next, plot its average variable cost (AVC) curve using the purple points (diamond symbol). Finally, plot its marginal cost (MC) curve using the orange points (square symbol). (Hint: For ATC and AVC, plot the points on the integer; for example, the ATC of producing one pair of boots is $200, so you should start your ATC curve by placing a green point at (1, 200). For MC, plot the points between the integers:…