MC$35ATCAVC1510500Units of outputFill in the columns in the following table. What quantity shoulda profit-maximizing firm produce? Verify your answer withmarginal reasoning.TFCTVCMCP= MRTRTCProfit$20SO$2212010222015223202522420402252060226209022Cost per unit ($) Use the information in the graph to find the values for the fol-lowing costs at an output level of 500.a. Total fixed costb. Total variable costc. Total costd. Marginal cost

MC ATC AVC 15 10 500 Units of output Fill in the columns in the following table. What quantity should a profit-maximizing firm produce? Verify your answer with marginal reasoning. TC Profit TFC TVC MC P-MR TR $20 $22 20 10 22 2 20 15 22 3 20 25 22 4 20 40 22 5 20 60 22 6. 20 90 22 ************* ****. ...*****...... . Cost per unit ($)

MC ATC AVC 15 10 500 Units of output Fill in the columns in the following table. What quantity should a profit-maximizing firm produce? Verify your answer with marginal reasoning. TC Profit TFC TVC MC P-MR TR $20 $22 20 10 22 2 20 15 22 3 20 25 22 4 20 40 22 5 20 60 22 6. 20 90 22 ********* . ...*...... . Cost per unit ($)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. Output TC MC ATC 50,800 $170,000 $0.60 100,800 220,000 1.10 150,800 257,500 1.71 200,800 365,500 2.45 Instructions: Enter your answers rounded to two decimal places. a. What is ATC per unit for each level of output listed in the table? Enter your answers in the table above. b. Are there economies of scale in production? Yes c. Suppose that the market price for a bottle of vitamins is $1.71. At that price the total market quantity demanded is 301,600,000 bottles. How many firms will be in this industry? firm(s) d. Suppose that, instead, the market quantity demanded at a price of $1.71 is only 150,800. How many firms will be in this industry? firm(s) e. Review your answers to parts b, c, and d. Does the level of demand determine…
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3. 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?
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