Answered: (i) Complete the Table above by filling…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition

Section: Chapter Questions

Problem 9E

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PART C: MARKET ANALYSIS

Pacesetter is a manufacturer of three-ring binders operating in a perfectly competitive industry. The Table below shows the firm's cost and revenue schedule

Quantity (cases)	Variable Cost	Total Cost	Marginal Cost	Average Variable Cost	Average Total Cost	Total Revenue	Profit (or Loss)
0	$0	$76
1	30	106				$40
2	50
3		134
4		140
5		160
6	114
7	150
8	190
9		316

PART C: MARKET ANALYSIS

(i)

Complete the Table above by filling in the blank cells.

(ii)

Based on the above Table, Pacesetter’s profit maximizing or loss minimizing level of output is __________;

and the (profit is _________) or (loss is __________)

(iii)

Should the firm continue to produce in the short run? What will happen in the long-run?

iv)What price corresponds to the shut-down point for Pacesetter and what will be the associated output? Explain briefly how you obtained your answer?

v)If the firm's fixed costs were $30 higher what would be the profit-maximizing output level in the short run? Should the firm continue to operate? Why?

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