The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Quantity of Ear Buds 5 10 15 20 25 30 35 40 Buddies Production Costs MC ($) $ - Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs 2.00 2.45 3.55 4.00 5.50 5.98 8.52 $ ATC ($) 2.00 2.00 2.15 2.50 2.80 3.25 3.64 4.25 b. At the profit-maximizing quantity, what is the total cost of producing ear buds? $ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? d. Now assume the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity ear buds. What will Buddies profit or loss be per week?

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Quantity of Ear Buds 5 10 15 20 25 30 35 40 Buddies Production Costs MC ($) $ - Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs 2.00 2.45 3.55 4.00 5.50 5.98 8.52 $ ATC ($) 2.00 2.00 2.15 2.50 2.80 3.25 3.64 4.25 b. At the profit-maximizing quantity, what is the total cost of producing ear buds? $ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? d. Now assume the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity ear buds. What will Buddies profit or loss be per week?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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