Use the figure below to answer the following question. Total revenue and total cost (dollars) 400 300 Z 200 100 Q 0 9Q Quantity Figure 12.2.1 Refer to Figure 12.2.1, which shows a perfectly competitive firm's total revenue and total cost curves. Which one of the following statements is false? A) At an output of Q1 units a day, the firm makes zero economic profit. B) At an output less than Q1 units a day, the firm incurs an economic loss. OC) At an output of Q2 units a day, the firm incurs an economic loss. D) Economic profit is the vertical distance between the total revenue curve and the total cost curve. E) At an output greater than Q3 units a day, the firm incurs an economic loss. Main Content

Use the figure below to answer the following question. Total revenue and total cost (dollars) 400 300 Z 200 100 Q 0 9Q Quantity Figure 12.2.1 Refer to Figure 12.2.1, which shows a perfectly competitive firm's total revenue and total cost curves. Which one of the following statements is false? A) At an output of Q1 units a day, the firm makes zero economic profit. B) At an output less than Q1 units a day, the firm incurs an economic loss. OC) At an output of Q2 units a day, the firm incurs an economic loss. D) Economic profit is the vertical distance between the total revenue curve and the total cost curve. E) At an output greater than Q3 units a day, the firm incurs an economic loss. Main Content

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following graph illustrates the demand and marginal revenue curve (D=MR) of a perfectly competitive firm. Suppose that when the firm produces 70 units, its average variable cost equals $30 per unit and its average total cost equals $55 per unit. Use the green rectangle (triangle symbols) to plot the total cost of producing 70 units. Next, use the grey rectangle (star symbols) to plot the total variable cost of producing 70 units. Then, use the tan rectangle (dash symbols) to plot the total revenue at 70 units. Finally, use the purple rectangle (diamond symbols) to plot the profit or loss at 70 units. PRICE AND COST (Dollars) 100 90 80 70 60 50 40 30 20 10 0 O 10 20 30 40 50 60 QUANTITY (Units) +ATC + AVC 70 D=MR 80 90 100 Total Cost Total Variable Cost Total Revenue Profit or Loss ?
Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output. If the marginal cost of producing the 10th unit is $14, to maximize its profit the firm should A) decrease its production. B) shut down. C) increase its production. D) increase the price it charges for its product. E) do nothing because it is already maximizing its profit.
Answer the following, providing a graphical illustration along with your answer where necessary:a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-runabnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’spayoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?
Consider the perfectly competitive market for titanium. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost ( MCMC ), average total cost ( ATCATC ), and average variable cost ( AVCAVC ) curves shown on the following graph
The following graph illustrates the demand and marginal revenue curve (D-MR) of a perfectly competitive firm. Suppose that when the firm produces 40 units, its average variable cost equals $65 per unit and its average total cost equals $80 per unit. Use the green rectangle (triangle symbols) to plot the total cost of producing 40 units. Next, use the grey rectangle (star symbols) to plot the total variable cost of producing 40 units. Then, use the tan rectangle (dash symbols) to plot the total revenue at 40 units. Finally, use the purple rectangle (diamond symbols) to plot the profit or loss at 40 units. PRICE AND COST (Dollars) 100 90 80 70 60 50 40 30 20 10 0 0 10 + 20 +ATC + AVC 30 40 50 60 QUANTITY (Units) 70 80 D=MR 90 H 100 Total Cost Total Variable Cost I Total Revenue Profit or Loss ?
1) A perfectly competitive firm faces the following Total revenue, Total cost and Marginal cost functions: TR = 10Q TC = 2 + 2Q + Q2 MC = 2 + 2Q At the level of output maximizing profit, the above firm's level of economic profit is A) $0 B) $4 C) $6 D) $8 *Additional information after I did the math: The price this firm charges for its product is $10, the level of output maximizing profit is 4
a.Suppose a perfectly competitive firm can produce10000 bushels of corn a year at an output at which marginal revenue is equal to marginal cost. The market price of corn per bushel is $2. The firm's total costs per year are $30000 and fixed costs per year are $15000. Show and explain which of the following is true: In the short run, this firm should a) Produce 20000 bushels to try to increase economic profit. b) Produce 10000 bushels of corn because, although they are losing money, they are losing less than if they shut down. c)Shut down. d) Continue producing until the price of corn increases. b.A perfectly competitive firm, with MC=q operates in a market character,zed by the following market demand and supply conditions: Demand: Q=20000-100P Supply: Q=100P How much output does this competitive firm produce to maximize profit? Show your work graphically and algebraically.
COnsider the following firm in a competitive market: total cost= 50+.5Q Q= Quantity What is its fixed cost? what is its variable cost?
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?
A perfectly competitive firm produces the level of output at which MR=MC on the rising portion of the firm’s marginal cost curve. At that output level, it has the following costs and revenues: TC = $830,000 VC = $525,000 TR = $428,000 Given that the firm produces the level of output at which MR=MC, calculate the amount of profit (loss) this firm earns. is it Profit=TR-TC?
If a perfectly competitive firm's average total cost is less than the price, then the firm A) incurs an economic loss. B) makes an economic profit. C) makes zero economic profit. D) makes either zero economic profit or an economic profit depending on whether the marginal revenue is equal to or greater than the price. E) None of these answers is correct because the relationship between the price and average total cost has nothing to do with the firm's profit.
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?