V (5) suppose that you decide that it would not be a bad idea to get an internship over the summer to gain some experience. A local furniture company, "Chairs or Us", calls you and the manager wants to test you on how much economics you know. He asks you the following questions: a) What happens to the firm's profit maximizing output choice and profit if the price of a chair falls from $ 40 to $ 35? b) Again, from the data given, show what happens to the firm's output choice and profit if the total fixed costs of production increased from $ 50 to $ 100? What general conclusion can you reach about the effects of fixed costs on the firm's output choice? Q (units) 0 1 2 3 4 5 6 7 8 9 10 11 Price ($/unit) TR 40 40 40 40 40 40 40 40 40 40 40 40 TC 50 100 128 148 162 180 200 222 260 305 360 425 II MR MC c) Using the same information, draw the firm's supply curve (Hint: you may want to plot the appropriate cost curves); Use a graph paper if necessary. Legend : TR = Total Revenue, II = Profits, MR = Marginal Revenue, MC = Marginal Cost

V (5) suppose that you decide that it would not be a bad idea to get an internship over the summer to gain some experience. A local furniture company, "Chairs or Us", calls you and the manager wants to test you on how much economics you know. He asks you the following questions: a) What happens to the firm's profit maximizing output choice and profit if the price of a chair falls from $ 40 to $ 35? b) Again, from the data given, show what happens to the firm's output choice and profit if the total fixed costs of production increased from $ 50 to $ 100? What general conclusion can you reach about the effects of fixed costs on the firm's output choice? Q (units) 0 1 2 3 4 5 6 7 8 9 10 11 Price ($/unit) TR 40 40 40 40 40 40 40 40 40 40 40 40 TC 50 100 128 148 162 180 200 222 260 305 360 425 II MR MC c) Using the same information, draw the firm's supply curve (Hint: you may want to plot the appropriate cost curves); Use a graph paper if necessary. Legend : TR = Total Revenue, II = Profits, MR = Marginal Revenue, MC = Marginal Cost

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Am. 106.
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