The table below shows the daily costs of Cathy's Corn Stand. Cathy sells her corn cobs in a perfectly competitive market. Cathy's Corn Stand's Production Costs AVC Quantity (corn cobs) 20 30 40 50 60 70 80 90 ce (dollars) 4.5 4.0 a. Draw Cathy's marginal cost (MC) curve. Instructions: Use the tool 'MC' to plot the curve point by point (8 points total). Cathy's Corn Stand's Production Costs 3.5 3.0 2.5 (dollars) $1.90 1.70 1.55 1.50 1.50 1.60 1.70 1.80 2.0 ATC (dollars) $4.40 3.37 2.80 2.50 2.33 2.31 2.33 2.36 MC (dollars) $1.60 ATC AVC 1.30 1.10 1.30 1.50 2.20 2.40 2.60 1 MC

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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The table below shows the daily costs of Cathy's Corn Stand. Cathy sells her corn cobs in a perfectly competitive market.
Cathy's Corn Stand's Production Costs
AVC
(dollars)
$1.90
1.70
1.55
1.50
1.50
1.60
1.70
1.80
Quantity
(corn cobs)
20
30
40
50
60
70
80
90
Price (dollars)
ATC
(dollars)
$4.40
3.37
2.80
2.50
2.33
2.31
2.33
2.36
1.0 -
Cathy's Corn Stand's Production Costs
MC
(dollars)
$1.60
a. Draw Cathy's marginal cost (MC) curve.
Instructions: Use the tool 'MC' to plot the curve point by point (8 points total).
ATC
AVC
1.30
1.10
1.30
1.50
2.20
2.40
2.60
MC
Transcribed Image Text:The table below shows the daily costs of Cathy's Corn Stand. Cathy sells her corn cobs in a perfectly competitive market. Cathy's Corn Stand's Production Costs AVC (dollars) $1.90 1.70 1.55 1.50 1.50 1.60 1.70 1.80 Quantity (corn cobs) 20 30 40 50 60 70 80 90 Price (dollars) ATC (dollars) $4.40 3.37 2.80 2.50 2.33 2.31 2.33 2.36 1.0 - Cathy's Corn Stand's Production Costs MC (dollars) $1.60 a. Draw Cathy's marginal cost (MC) curve. Instructions: Use the tool 'MC' to plot the curve point by point (8 points total). ATC AVC 1.30 1.10 1.30 1.50 2.20 2.40 2.60 MC
b. The market price of corn is $2.20 per cob. In the short run, how much corn should Cathy produce each day to maximize profits?
cobs per day
c. What are Cathy's profits/losses per day if she produces the profit-maximizing quantity of corn in the short run (losses are expressed as a negative number)?
$
d. In the short run, assuming nothing else changes, Cathy should:
shut down, because the market price is above the AVC.
O produce the same quantity of com per day.
● produce a lower quantity of corn per day.
produce a greater quantity of com per day.
e. If the short-run price of corn falls to $1.30 per cob, Cathy should:
produce the same quantity of com per day.
O shut down, because the market price is below the AVC.
O produce a greater quantity of com per day.
O produce a lower quantity of corn per day.
Transcribed Image Text:b. The market price of corn is $2.20 per cob. In the short run, how much corn should Cathy produce each day to maximize profits? cobs per day c. What are Cathy's profits/losses per day if she produces the profit-maximizing quantity of corn in the short run (losses are expressed as a negative number)? $ d. In the short run, assuming nothing else changes, Cathy should: shut down, because the market price is above the AVC. O produce the same quantity of com per day. ● produce a lower quantity of corn per day. produce a greater quantity of com per day. e. If the short-run price of corn falls to $1.30 per cob, Cathy should: produce the same quantity of com per day. O shut down, because the market price is below the AVC. O produce a greater quantity of com per day. O produce a lower quantity of corn per day.
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