PQ4.2 Case: A firm is operating in a competitive market. Your Cost of Production is given by C = 200 + 2q², where the Level of Output is (g) and the Total Cost is (C). The Marginal Cost of Production (MC) is 4q; the Fixed Cost (FC) is $200. Given: C=200+2q² q=Level of Output C = Total Cost MC = 4q| FC = $200 Questions: (i) If the price of watches is $100, how many watches should you produce to Maximize Profit? (ii) What will the Profit Level be? (iii) At what Minimum Price will the firm produce a Positive Output?

PQ4.2 Case: A firm is operating in a competitive market. Your Cost of Production is given by C = 200 + 2q², where the Level of Output is (g) and the Total Cost is (C). The Marginal Cost of Production (MC) is 4q; the Fixed Cost (FC) is $200. Given: C=200+2q² q=Level of Output C = Total Cost MC = 4q| FC = $200 Questions: (i) If the price of watches is $100, how many watches should you produce to Maximize Profit? (ii) What will the Profit Level be? (iii) At what Minimum Price will the firm produce a Positive Output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.
7. Assume that the marginal cost curve is given by mc(q) = 100 + 2q. (a) If the price is $160, what is the optimal production for the firm? What if the price is $120? (ignore the shut-down decision for this part) (b) Assuming that the market is cleared at $160 (no shortage/surplus). If the market demand is equal to 10,000 units of the product. How many firms are currently operating (n) in the market? (Hint: if the market clears qª = n x q°) (c) If the total cost curve is TC 256 + 100g + q², what's the average total cost curve? %3| what's the break-even price? (d) If the demand curve is given by qd = 8, 452 – p, what's the long-run equilibrium price, the equilibrium quantity and the long-run total number of firms (n) in the industry?
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2.2
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