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| (The Short-Run Firm Supply Curve) Use the following data to answer the questions below: a. Calculate the marginal cost and average variable cost for each level of production. b. How much would the firm produce if it could sell its product for $5? For $7? For $10? c. Explain your answers. d. Assuming that its fixed cost is $3, calculate the firm’s profit at each of the production levels determined in part (b). |
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- 8. (The Short-Run Firm Supply Curve) Each of the followingsituations could exist for a perfectly competitive firm in the short run. In each case, indicate whether the firm should produce in the short run or shut down in the short run, or whether additional information is needed to deter- mine what it should do in the short run.a. Total cost exceeds total revenue at all output levels. b. Variable cost exceeds total revenue at all output levels. c. Total revenue exceeds fixed cost at all output levels. d. Marginal revenue exceeds marginal cost at the currentoutput level. e. Price exceeds average total cost at all output levels. f. Average variable cost exceeds price at all output levels. g. Average total cost exceeds price at all output levels.Economics ) "Shoe Industry under Pressure Amid Rising Costs" Rising costs have forced about 15 per cent of shoe manufacturers in a major south China industrial centre to shut down or relocate in the past year... [the firms have] identified rising wages as a key factor behind the closures and relocations from Dongguan...The problems in the footwear industry reflect broader issues affecting manufacturers across China's Pearl River Delta..." www.ft.com, 2/26/2008 Using an AS/AD framework to describe the events in the story, there would be a A) leftward shift in the SAS curve. B) rightward shift in the AD curve. C) leftward shift in the AD curve. D) rightward shift in the SAS curveCompleted 0 out of 30 Resources Submit All Question 16 of 30 The graph shows the costs, revenue, and demand facing a A profit-maximizing monopolistic competitor monopolistically competitive firm. Refer to the graph to answer the three questions. 50- Marginal cost 40- B 30 (5) 20-C Average cost The area covered by rectangle CDFE is the firm's ID 10- Demand 0- total cost. 10 20 30 40 50 60 70 80 90 100 1i0 -10- Marginal revenue total revenue. Quantity O profit. O None of the above. The area covered by rectangle A BDC is the firm's total cost. 8:19 P 46°F A E 4) 12/15/2 a Price ($)
- 4. Profit maximization using total cost and total revenue curves Suppose Carlos runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Carlos's total cost curve. Use the blue points (circle symbol) to plot total revenue, and the green points (triangle symbol) to plot profit for the first seven shirts that Carlos produces, including zero shirts. O REVENUE (Dollars) 125 COSTS AND REVENUE (Dollars per shirt) 100 75 50 25 -25 -50 30 20 15 0 Total Revenue 0 et = Profit n A A O 0 1 0 0 2 Calculate Carlos's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. (?) 1 3 4 5 QUANTITY (Shirts) 2 3 0 5 QUANTITY (Shirts) 6 4 Total Cost 0 6 O 7 8 7 8 -0- (?) Marginal Revenue Marginal Cost Carlos's profit is…(Table: Total Cost and Output for All-Natural Frozen Yogurt) Use Table: Total Cost and Output for All- Natural Frozen Yogurt, which describes Sasha's total costs for his perfectly competitive all-natural frozen yogurt firm. İf the market price of a tub of frozen yogurt is $20, how many tubs of frozen yogurt will Sasha produce in the short run? Table: Total Cost and Output for All-Natural Frozen Yogurt Output Total Cost $10 60 80 3 110 4 170 5 245 O a) 1 b) o d) 25. Consider a firm that uses both labor and capital in production. The price of capital is $20 per unit and the wage rate is $10 per hour. a. Draw the firm's isocost line assuming a total production cost of $100. How steep is this line (that is, what is its slope)? Be sure to clearly label the axes. b. Suppose the wage increases to $15 per unit. In which direction does the substitution effect change the firm's demand for labor and capital? In which direction does the scale effect change the firm's demand for labor and capital? c. If the firm chooses its labor and capital combination to minimize its production costs, will the marginal product of labor be higher than, lower than, or equal to the marginal product of capital? Why? (Assume that the price of labor and capital are those given in part b.)
- 13. Application Problem Use the table to find the (a) Linear Supply equation: P = mx + b (b) Linear Demand equation: P = mx + b Prof herbert (c) The equilibrium point. This is the point where the two lines meet. Supply In millions Demand in millions Year Price $ per unit 2002 2003 340 270 2,22 370 250 | 2.72 Hint to finding solution (a) Find the slopes for demand and supply using the point (x,p) given in the table (b) Use point slope equation substituting the slope obtained and one point (x,p) to obtain the requires demand and supply equations respectively. (c) Graph the two equations, The point (x,p) the two lines meet is the equilibrium point meaning when Demand = Supply. (x,p) 14. Modeling problem Medgar Evers College bookstore sells a custom printed T-Shirt. The cost function is given as C(x) = 250 + 4.50x. (a) What is the slope in the cost function (b) Interpret the meaning of the slope in the context of this problem.7. (Figure: Market for Walnuts I) The graph depicts the perfectly competitive market for walnuts. Which of the following statements is (are) TRUE? Price 3 ($/pound) 2.611. 1.73 1 c. II and III d. I 0 20 26.63 60 80 100 67.34 79.65 Quantity of walnuts (millions of pounds) 40 I. The demand curve facing a walnut grower is perfectly elastic at $1. II. If a walnut grower sold 80,000 pounds of walnuts, his total revenue would be $138,400. III. If a walnut grower sold one more pound of walnuts, his total revenue would increase by $1.73. a. I, II, and III b. II2. Cost-Volume-Profit Chart The cost-volume-profit chart shows the relationship between sales volume, costs, and profit. To cre this chart, we need to calculate the following values: - Contribution Margin per Unit: Selling Price - Variable Cost per Unit - Contribution Margin Ratio: Contribution Margin per Unit / Selling Price - Break-Even Point: Fixed Costs / Contribution Margin per Unit - Profit: (Unit Sales * Selling Price) - (Unit Sales * Variable Cost per Unit) - Fixed Costs For the first 100 units of clever wearable devices, we can calculate these values as follows: - Contribution Margin per Unit: $150 $50 = $100 - Contribution Margin Ratio: $100/$150 = 0.67 or 67% - Break-Even Point: $10,000/$100 = 100 units - Profit: (Unit Sales $150) - (Unit Sales * $50) - $10,000 We can plot these values on a graph with unit sales on the x-axis and revenue, costs, and profit on the y-axis.
- The tapie pelow Cotains pricerdemand and total cOSt data Tor the production of treadmilis, where p is the wholesale price (in dollars) of a treadmill for an annual demand of x treadmills, and C is the total cost (in dollars) of producing x treadmills. p ($) C ($) 2,910 1,450 3,634,000 3,415 1,275 3,782,000 4,645 1,123 4,185,000 5,330 918 4,290,000 Use this data to find a linear regression equation for price-demand data, using x as the independent variable: p= ax + b, where a is rounded to 1 decimal place and 6 is rounded to the nearest integer. Use this data to find a linear regression model for the cost data, using x as the independent variable: C(x) = cx + d, where c is rounded to the nearest integer and d is.rounded to the nearest 10,000. To Do Notifications Dashboard Calendar4. Complete the following schedule: Quantity 0 1 2 3 4 5 6 7 Total Cost $9 $12 $16 $21 $30 $40 $52 $6 ATC MC Assuming the price of this product is $12, at what output is (a) Total profit maximized (b) Total revenue maximized (c) Profit per unit maximized3. There are two profit maximising firms, Alpha Inc. and Beta Ltd. Both use labour, L and capital, K to produce their output, Q and they both employ workers at the minimum wage. Following a government review, the national minimum wage rises from W₁ to W₂. (a) Use an isoquant/isocost diagram to show how this will affect Alpha's optimal choice of inputs, assuming it wants to continue to produce the same output. (b) Following the increase in the wage rate, Alpha Inc. reduces the number of workers employed by significantly more than Beta Ltd. Construct the demand curve for labour for Alpha Inc. and explain how and why its shape will change if you graphed the same curve for Beta Ltd. There is a third firm in this market called Gamma plc. which also uses labour and capital to produce output, where w is the price of labour, r is the price of capital and Q is the output. Suppose that Gamma plc. is a price-taking firm and faces a cost function: 1 1 c(w,r,Q) = — w²r²Q² (c) By deriving an…
