Suppose that the total fixed cost for a particular competitive firm is $6. The marginal cost for the first unit produced is $9 and decreases by $2 for each of the next two units produced. Thereafter, marginal cost increases by $2 for each additional unit. a. Complete the table below. Round your "Average Variable Cost". "Average Total Cost" answers to 2 decimal places. Marginal Cost Total Variable Average Variable Average Total Units Total Cost Cost Cost Cost 1 15 15 2 22 16 11 27 5 21 9 4 34 28 7 8.5 43 37 74 8.6 b. What is the shutdown price? What is the break-even price? Shutdown price: Break-even price: c. If the market price is $11, what is the firm's profit maximizing output? What is the firm's total profit or loss? Output: Total: Profit

Suppose that the total fixed cost for a particular competitive firm is $6. The marginal cost for the first unit produced is $9 and decreases by $2 for each of the next two units produced. Thereafter, marginal cost increases by $2 for each additional unit. a. Complete the table below. Round your "Average Variable Cost". "Average Total Cost" answers to 2 decimal places. Marginal Cost Total Variable Average Variable Average Total Units Total Cost Cost Cost Cost 1 15 15 2 22 16 11 27 5 21 9 4 34 28 7 8.5 43 37 74 8.6 b. What is the shutdown price? What is the break-even price? Shutdown price: Break-even price: c. If the market price is $11, what is the firm's profit maximizing output? What is the firm's total profit or loss? Output: Total: Profit

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Tim is thinking of opening a garment store. He estimates that it would cost $270000 per year to rent the location and buy the merchandise. In addition, he would have to quit his $63000 per year day job. Tim estimates he can sell $315600 worth of garments in a year. a. What will be the accounting profit and economic profit for Tim? b. If you are an economist, should you suggest opening the store? Why?
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