The figure above shows the costs for a grower in the perfectly competitive turnip market. If the price is $1,200 for a ton of turnips, the firm is Select one: O a. making an economic profit. Ob. making zero economic profit. Oc. incurring an economic loss. O d. More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss.

The figure above shows the costs for a grower in the perfectly competitive turnip market. If the price is $1,200 for a ton of turnips, the firm is Select one: O a. making an economic profit. Ob. making zero economic profit. Oc. incurring an economic loss. O d. More information is needed to determine if the firm is making a positive economic profit, zero economic profit, or incurring an economic loss.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the figure. At the price of $6, the firm's short-run decision should be to A. exit the market. B. decrease production. C. continue producing because it is making a positive profit. O D. stop producing because variable costs cannot be covered. Dollars per Unit $6 Output MC ATC AVC Q
The company XYZ produces chairs and its costs are given in the table below. Variable Quantity Total Costs Variable Costs Fixed Costs Value 30 $3,600 $2,400 $1,200 In the short run, should this company shut down if the price of the chair is $95/unit? a. Yes, because the average total cost is higher than the price. b. Yes, because the average variable cost is higher than the price. O c. No, because the average total cost is higher than the price. d. No, because the average variable cost is lower than the price.
A perfectly competitive firm maximizes profit by producing 100 units at an ave total cost of $12 and an average fix cost of $5 for a market price of $10. Its shutdown price will be - $10 O b. $5 $7 O d. $12 Show Transcribed Text Under perfectly competitive conditions, a firm should continue to produce - OaUntil total revenue is as high as possible Ob Until price is equal to marginal cost Oc Until profits are negative Od. While costs are falling, then stop Oe. Until there is no more revenue Show Transcribed Text A perfectly competitive firm maximizes profit by producing 200 units at an average total cost of $15 and an average fix cost of $5 for a market price of $25. Its total fixed cost will be- O a $3000 O b. $1000 O c. $1500 Od. $2000 Show Transcribed Text According to this principle, as successive units of a variable factor (say labor) are added to a fixed factor, beyond some point the marginal product attributed to every additional unit of that variable factor will decline. O a.…
In the long run, a perfectly competitive firm makes O A) either a positive economic profit or a normal profit. B) zero accounting profit. C) zero economic profit. D) negative economic profit, that is, an economic loss. E) a positive economic profit.
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A firm facing a demand curve will have zero quantity demanded if it raises its price above the market price. a. perfectly elastic O b. relatively elastic O c. relatively inelastic O d. perfectly inelastic A perfectly competitive firm is breaking even. In the short run it should In the long run it should a. produce where MC = MR; keep the same production level O b. produce where MC = MR; leave the industry O c. shut down; exit the industry O d. shut down; expand
Brody's firm produces trumpets in a perfectly competitive market. The table below shows Brody's total variable cost. He has a fixed cost of $240, and the price per trumpet is $60.-Calculate the average total cost of producing 6 trumpets. Show your work. -Calculate the marginal cost of producing the 11th trumpet. -What is Brody's profit-maximizing quantity? Use marginal analysis to explain your answer. -At the profit-maximizing quantity you determined in part (c), calculate Brody's profit or loss. Show your work. -Brody also produces saxophones at a loss in a perfectly competitive market. Draw a correctly labeled graph for Brody's firm showing the following at a market price of $200. -Brody's profit-maximizing quantity of saxophones -Brody's loss, completely shaded Quantity Total Variable cost 6 $120 7 $145 8 $165 9 $220 10 $290 11 $390
In the short run, profits when a competitive firm shuts down are-$8200, and they are -$350 when the firm continues to produce. This firm will minimize losses in the short run by Choose one: A. either shutting down or continuing to produce. O B. continuing to produce. O C. shutting down.
In a perfectly competitive market there is a donut shop that sells 1,200 donuts daily. Each donut sells for the market price of $0.75 and they sell out every day. Assume that this company has labor costs of $275 and materials costs of $400. a. At what price would this donut shop shutdown in the short run? b. Using only variable costs, what is the donut shop’s daily profit? - Now assume that the owner is thinking of adding a second location downtown. The capital investment required is $4,000. The normal rate of return is 5%. c. If the new shop could operate under the same conditions as the original location is it a good business decision to expand?
The optimal output rule for a perfectly competitive firm is to produce that quantity where A. P = MC in the long run, but in the short run to produce that quantity where MC = %3D ATC. O B. MC = ATC in the short run. C. P = MC no matter what the time period, provided that price is greater than average variable cost. D. P = MC no matter what the time period, provided that price is greater than %3D average total cost.
Which of the following is an expression of profit for a perfectly competitive firm? Profit for a perfectly competitive firm can be expressed as ⒸA. Profit=(PxQ)-(TCxQ), where P is price, Q is output, and TC is total cost. OB. Profit=P-MC, where P is price and MC is marginal cost. OC. Profit=PxQ, where is price and Q is output. O D. Profit=P-ATC, where P is price and ATC is average total cost. O E. Profit= (P-ATC) XQ, where P is price, Q is output, and ATC is average total cost.