Craigsburg enterprises has a fixed cost of 10,000. It’s variable costs are shown in the table below. These costs remain unchanged as market prices change over the next few years: YearMarket price19919,00016,0006,0004,00020,0001992199319941995a. Find the profit-maximizing output of this firm and calculate its profit for the years 1993 and1995. (hint: apply the process of profit maximization using the cost information given in thefirst table and the price information given in the second table).b. How would this firm's output decision found in 1993 and 1995 differ from your answers in(a) if fixed cost were $20,000 instead of $10,000? How do you know? VariableQuantity(units per year)Cost19,00017,000324,00038,0004.55,0006.78,000Market prices, years 1991-1995:YearMarket price19919,00016,0006,0001992199319944,00020,0001995

Answered: Quantity (units per year) Variable Cost…

Quantity (units per year) Variable Cost 9,000 17,000 24,000 38,000 55,000 78,000 Market prices, years 1991-1995: Year Market price 1991 9,000 1992 16,000 6,000 4,000 20,000 1993 1994 1995 123 4 5.6

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Craigsburg enterprises has a fixed cost of 10,000. It’s variable costs are shown in the table below. These costs remain unchanged as market prices change over the next few years:

Year
Market price
1991
9,000
16,000
6,000
4,000
20,000
1992
1993
1994
1995
a. Find the profit-maximizing output of this firm and calculate its profit for the years 1993 and
1995. (hint: apply the process of profit maximization using the cost information given in the
first table and the price information given in the second table).
b. How would this firm's output decision found in 1993 and 1995 differ from your answers in
(a) if fixed cost were $20,000 instead of $10,000? How do you know?

Variable
Quantity
(units per year)
Cost
1
9,000
17,000
3
24,000
38,000
4.
55,000
6.
78,000
Market prices, years 1991-1995:
Year
Market price
1991
9,000
16,000
6,000
1992
1993
1994
4,000
20,000
1995

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