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

See similar textbooks

Similar questions

COURSE: ECONOMICS A competitive firm has a marginal cost function CM = 6 + 4q and market price is P = $12.a) What the firm's level of output?b) What producer surplus? Hint: graph and computec) Assume that Average Variable Cost is AVC = 6 + 2q and Fixed Costs FC = $6; does firm have a positive, negative or zero profit? Explain
You are the manager of a train company. Recently total sales have been a bit low and you are now considering means to give sales a boost. Market research has shown that currently the price of train tickets is historically low. Market research has also shown that the demand curve for train tickets is downward sloping. You may assume that your company is not a price taker on the market. 1.One of your colleagues has suggested that it is important to lower the price of train tickets. In that case, she argues, the demand will increase. Do you agree with her? Explain why. 2.She continues her argument by concluding that if the demand goes up, the total value of sales of train tickets should therefore increase. Do you agree with her? Explain why.
13. The marginal profit for the new X-99 pogo stick is P'(x) = -0.1x+ 60 where x is the number of sticks produced and sold. The profit is - $1000 when 50 sticks have been produce and sold. a) Find the profit function. b) What level of production of pogo sticks (x) produces a maximum profit?
Am. 106.
1. Suppose you are the owner of a burger restaurant that has a cost of production given by C = 400 + 0.02q^2 where q is the number of burgers produced per day. Assume that the market for burgers is perfectly competitive. a. If the market price for a burger is $10, how many burgers should the manager plan to produce in a day? b. What is the profit level? Is this the maximum profit that the restaurant can make per day? c. What output will the firm produce if the price of a burger goes down to $8?
Profit maximization using total cost and total revenue curves Suppose Caroline runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Caroline's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven (inclusive) that Caroline produces. Caroline's profit is maximized when she produces______ shirts. When she does this, the marginal cost of the last shirt she produces is ______, which is (GREATER OR LESS) than the price Caroline receives for each shirt she sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize her profit) is _____, which is (GREATER OR LESS) than the price Caroline receives for each shirt she sells. Therefore, Caroline's profit-maximizing quantity corresponds to the…
Suppose that in 2018, you inherited from your grandfather a small planetarium that had been closed for several years. Your planetarium has a maximum capacity of 75 people and all the equipment is in working order. You decide to reopen the planetarium on the weekends as a new laser-tag venture called Shoot for the Stars, and much to your delight it has become an instant success, with admission tickets selling out quickly for each day you are open. Describe some of the decisions that you must make in the short run. What might you consider to be your “fixed factor”? What alternative decisions might you be able to make in the long run? Explain
Only typed answer
LOOKING FOR last two: d. How should this firm change its output to maximize profit if fixed cost changes from 3200 to 3800 (ie. TC=3800+50Q+2Q^2) e. How should firm change its output if VARIABLE cost changes (ex. TC=3200+80Q+2Q^2)
Gloria decided to open her own business and earns $50,000 in accounting profit the first year. When deciding to open her own business, she turned down three separate job offers with annual salaries of $50,000, $60,000, and $70,000. What is Gloria's economic profit from running her own business? Question 5 options: a) -$75,000 b) -$20,000 c) $20,000 d) none of the above
Use the following graphs for questions 22 and 23. At what price would a firm exit the market? (a) Relationship of total cost to total variable cost and total fixed cost (b) Relationship of marginal cost to average total cost, average variable cost, and average fixed cost Total Costs (dollars) 700 Cost 150 Per 140 TC Unit 130 TVC (dollars) 120 MC 600 110 100 500 90 80 400 70 60 ATC 300 TFC 50 AVC 40 AFC 200 30 20 TFC 100 10 AFC 0 1 2 3 4 5 6 7 8 9 10 11 12 0 1 2 3 4 5 6 7 8 9 10 11 12 Quantity of Output Quantity of Output (units per hour) (units per hour) O $20 O $30 $45 $50
Suppose the cost of renting a snowy bus were to fall from $30 per hour to $20 per hour. What do you expect would happen in the short-run (stage 1 equilibrium) to (a) the number of cones produced by each snowy bus; (b) total production of cones in the market, and (c) economic profits of snowy bus businesses? Briefly explain (you don't need to do any calculations, just explain inwords).