The graph below depicts the cost curves faced by all firms in a particular industry. While the second graph show the total market demand (in thousands). Initially there are 500 firms.98721098520 40 6080100 120 140 160 180 20050100 150200 250 300 350 400 450 500Demand in thousands

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Answered: The graph below depicts the cost curves…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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7. Short-run supply and long-run equilibrium Consider the competitive market for rhenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. COSTS (Dollars per pound) 100 90 80 70 60 40 20 10 + 0 + 0 MC + 5 ATC AVC D 0 10 15 20 25 30 35 QUANTITY (Thousands of pounds) 40 + 45 50 ?
Suppose the graph depicts the marginal cost (MC) curves of two profit maximizing Texas cotton farmers, Jesse and Neal. Assume Jesse and Neal sell their cotton in the same competitive market. What is the most efficient way for Jesse and Neal to produce a total of 1200 bales of cotton? Jesse's optimal output: Neal's optimal output: 400 Incorrect 200 Incurrect bales bales Price and cost $10- 9- 8- 7- 6- MC MC 0 100 200 300 400 500 600 700 800 900 1000 Bales of cotton
The table below provides revenue and cost information for a perfectly competitive firm producing computers. How much are total costs if 3 computers are produced? How much are total variable costs if 5 computers are produced? What is the price of a computer? What is the average revenue from producing computers? What is the marginal revenue of producing computers? Over what output range will firm earn economic profits?
. Mr DIY is a new small scale palm oil supplier. There are many small scale palm oil suppliers in the market. The price of oil palm is solely determined by the market demand and supply. Describe the market characteristics of this industry. As Mr DIY is a new firm in the market, his firm is facing a problem of revenue lesser than the total variable costs. Illustrate the situation with an appropriate diagram(s). Evaluate the situation of this firm and provide one suggestion for the firm to sustain in the long run.
Consider the perfectly 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. PRICE AND COST PER UNIT 100 90 10 0 10 Price (Dollars per jacket) 15 20 25 55 70 85 20 10 100 0 00 For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit. Assume that when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero jackets and the profit-maximizing quantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will make a profit, suffer a loss, or break even at each price. 20 10 D MC-D 0 · D 0 ATC O AVC On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that…
Problem two Consider the total cost and total revenue given in the following table: Total Total Quantity cost Revenue 0 1 2 3 4 5 6 7 8 9 10 11 13 19 27 37 0 8 16 24 32 40 48 56 a) Calculate the profit for each quantity. How much should the firm produce to maximize profit? b) Calculate the marginal revenue and marginal cost for each quantity. Graph them. c) Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a long-run equilibrium?
7. Short-run supply and long-run equilibrium Consider the competitive market for copper. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per pound) 80 72 64 56 48 40 32 24 16 8 0 0 MC ATC AVC 4 8 12 16 20 24 QUANTITY (Thousands of pounds) 0 n 28 32 U 36 40 (?)
The table shows total cost and total revenue information for a competitive firm. Quantity (units) Total cost ($) Total revenue ($) 0 500 0 1 600 135 2 710 270 3 830 405 4 960 540 5 1,100 675 6 1,250 810 7 1,410 945 8 1,580 1,080 9 1,760 1,215 10 1,950 1,350 Firms making a loss will compare the losses if it shuts down to the losses if it operates in the short run. What quantity will the firm produce if it shuts down in the short run? Output: unitsunits What will the profits be if this firm shuts down? $ What quantity will the firm produce to minimize losses in the short run? unitsunits If this firm chooses to operate at a loss, what will its profits equal? $ If the cost and revenue numbers in the table will continue permanently, what will this firm choose to do? The firm will continue to operate in the short run, and exit the market in the long run. shut down…
The following graph plots the marginal cost (MC) curve, average total cost (ATC) curve, and average variable cost (AVC) curve for a firm operating in the competitive market for snapback hats. COSTS (Dollars) 100 100 80 90 80 20 70 70 HD 50 40 30 20 0 11 D 10 O MC Price (Dollars per snapback) 15 15 20 25 55 70 85 201 ATC 0 D AVC O 50 60 70 80 QUANTITY (Thousands of snapbacks) For every price level given in the following table, use the graph to determine the profit-maximizing quantity of snapbacks for the firm. Further, select whether the firm will choose to produce, shut down, or be indifferent between the two in the short run. (Assume that when price exactly equals average variable cost, the firm is indifferent between producing zero snapbacks and the profit-maximizing quantity of snapbacks.) Lastly, determine whether the firm will earn a profit, incur a loss, or break even at each price. □ Quantity (Snapbacks) BO 100 ▼ On the following graph, use the orange points (square symbol) to…
Using the graph below, calculate the firm's profits at the profit maximizing output Price 408 384 360 336 312 288 264 240 216 192 168 144 120 96 72 48 24 0 0 56 112 168 224 280 336 392 448 504 560 616 672 728 784 840 896 Quantity -PMRMC-AC
The following diagram shows the market demand for steel. Use the orange points (square symbol) to plot the short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 40 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 60 firms. PRICE (Dollars per ton) 80 72 Supply (20 firms) 64 58 Demand 48 Supply (40 firms) 40 32 2 24 16 8 ° 0 120 240 360 480 600 720 840 960 1080 1200 QUANTITY OF OUTPUT (Thousands of tons) Supply (60 firms) ? If there were 60 firms in this market, the short-run equilibrium price of steel would be $ Therefore, in the long run, firms would Because you know that perfectly competitive firms earn be $ per ton. At that price, firms in this industry…
Consider the perfectly competitive market for sports jackets. The following graph shows the marginal cost ( MCMC ), average total cost ( ATCATC ), and average variable cost ( AVCAVC ) curves for a typical firm in the industry.

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The graph below depicts the cost curves faced by all firms in a particular industry. While the second graph show the total market demand (in thousands). Initially there are 500 firms. 9 8 7 2 10 9 8 5 20 40 60 80 100 120 140 160 180 200 50 100 150 200 250 300 350 400 450 500 Demand in thousands