QUESTION TWO Carefully study the graph below and answer the questions that follow. The graph show the cost and revenue structure of a firm operating in a perfect competitive market PRICE COST OUTPUT 5 6 7 8 9 a. Name the graphs A, B, and C b. For each level of price compute the profit or loss minimizing level of output, the actual profit or loss made by the firm, the short run average variable cost and the Short Run Average variable cost and use the information to fill up the table below Price Level Profit maximizing Profits or Loss or loss minimizing Level of Output Short run Average variable cost Short Run Average total cost 3 8 9 12 c. At what level of output would the firm consider as a shutdown point, give reasons 15 12 86 53

QUESTION TWO Carefully study the graph below and answer the questions that follow. The graph show the cost and revenue structure of a firm operating in a perfect competitive market PRICE COST OUTPUT 5 6 7 8 9 a. Name the graphs A, B, and C b. For each level of price compute the profit or loss minimizing level of output, the actual profit or loss made by the firm, the short run average variable cost and the Short Run Average variable cost and use the information to fill up the table below Price Level Profit maximizing Profits or Loss or loss minimizing Level of Output Short run Average variable cost Short Run Average total cost 3 8 9 12 c. At what level of output would the firm consider as a shutdown point, give reasons 15 12 86 53

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 41P: A computer company produces affordable, easy-to-use home computer systems and has fixed costs of...

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A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
What two lines on a cost curve diagram intersect at the shutdown point?
Use the graph below of a perfectly competitive firm to answer these questions and assume that the industry price is $P4 Price P₂ aaaa P₁ MC AVC ATC Q₁Q₂ Q3 Q4 Quantity 1. At an industry price of P4, what is the profit mazimizing level of output and what type of profit/loss is the firm earning 2. If there is a decrease in industry demand causig the industry price to fall to P2, what is the profit maximizing level output, pr position of the firm or is this firm producing in the short run? 3. What industry price represents the long run profit position for the firm?
Don't use chatgpt or any AI A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
JYour business has the capacity to produce up to 5 units/week. The table & graph below show average cost (AC) for different weekly production levels. Your objective is to maximize profit each week. Average Cost 22 20 AC 18 1 20 14 2 15 12 3 12 10 1 2 4 4 13 Quantity 15 Your product sells in the market for $21/unit, and you can sell as many units at that price as you can bring to market. You know from your economics training that deciding how much to produce should rely on marginal concepts like marginal cost (MC). So, based on the AC table above, create a table that shows the MC of each unit. (Assume that there are no fixed costs, so total costs are zero if Q=0.) Based on MC for each unit, determine the profit-maximizing quantity to produce and sell. BRIEFLY explain your answer. (Your answer needs to be based on MC and being able to sell each unit for $21.) AC ($/unit)
Next question ice and cost (dolars per par) The graph shows the long-run situation facing a producer of running shoes. In the market for running shoes, all the firms face a similar demand curve and have similar cost curves 120- Draw a vertical arrow that shows the firm's markup at the profi-maximizing quantity. Label R. MC t004 What is a fim's markup? /ATC A fem'u markup is the amount by which exceeds OA price; average total cost 60 OB. price, marginal cost OC. average total cost marginal revenue OD. average total cost marginal cost 20- Describe the market of a firm in perfect competition MR O 25 7 100 1is e ths 200 zis Quantity (pain of shoes per week) A firm in perfect competition has OA a markup similar to a firm in monopolistic competition OB. no markup > Draw only the objects specfied in the question Oc. a negative markup O D. a markkup similar to a monopoly
3. Profit maximization using total cost and total revenue curves Suppose Ana runs a small business that manufactures shirts. Assume that the market for shirts is a perfectly competitive market, and the market price is $20 per shirt. The following graph shows Ana's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Ana produces, including zero shirts. TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars) Total Revenue A 125 100 Total Cost ☐ Profit 200 175 150 75 50 ༔་ཎྜ་ ྴ་སྐྱ ིི་ཐྭ་8་མ་° 1 2 3 4 5 6 7 8 QUANTITY OF OUTPUT (Shirts) (?) Calculate Ana's marginal revenue and marginal cost for the first seven shirts she produces and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. Note: Be sure to plot marginal values between the appropriate whole unit values. For instance, plot…
Using the graph below, calculate the firm's profits at the profit maximizing output 196 182 168 154 140 126 112 98 84 70 56 42 28 14 23 46 69 92 115 138 161 184 207 230 253 276 299 322 Quantity -P -- MR MC AC -10 100 250 Price
for this graph answer the following question what is the total revenue? what is the total profit? what is the maximun point?
The situation facing by firm "Smart", a producer of running shoes, is shown in the following figure. 100 MC ATC 80 60 40 20 MR 50 100 150 200 Quantity (pairs of running shoes per week) a. What quantity does Smart Shoes produce? Answer: b. What is the price of a pair of Smart shoes? Answer: c. What is Smart's economic profit or economic loss? Answer: Why MR curve is below to demand curve Price and cost (dollars per pair) 8
Review View Tell me what you want to do... Aa - 三 AaBbCcDc AABBCCI AaBbCcD AaBbC ,吵,A T Normal Body Text 1 No Spac. Heading 1 Paragraph Styles Question 2. MC ATC A VC 2.8 10 11 12 Quan lily (per day 8 The graph above skows the cost structure of a perfectly competitive firm. Use the graph above to answer the following questions. a. At which price the firm will earn zero economic profit b. What is the shut-down price? c. Above what price the firm will earn positive economic profit? d. At what price range the firm will incur a loss? Why would it continue the production? Explain. e. Show the supply curve of the firm on the graph. Explain. | 99+ ASUS Price and cosb (dollas)
Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 72 16 AVC 16 24 40 QUANTITY (Thousards of jaats) For each price in the following tabie, use the graph to determine the number of jackets this firm would produce in arder to maximize its profie. Assume that when the price is exacty equal to the average variabie cost, the firm is indifferent between producing zero jackets and the proft-maximizing quandity. Also, indicate whether the fiem wil produce, shut down, or be indiferent between the two in the short run. Lastiy, determine whether e w make a prafit, suffer a loss, ar break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 4 12 36 48 60