Which of the following are true about theprofit-maximizing rule of MR = MC? (checkall that apply)A) The rule applies only if producing ispreferable to shutting down.(B) In some cases, MR will equal MC at afractional level of output and therefore thelast complete unit of output should beproduced where MR < MC.(C) The rule can be restated as P = MC whenapplied to a purely competitive firm becauseproduct price and MR are equal.(D) The rule is an accurate guide to profitmaximization for all firms regardless of theirmarket structure.

The market structure can be divided into four based on the degree of competition and the type of…

Answered: Which of the following are true about…

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

Suppose the cost function for a firm is given by C(Q) = 100 + Q2. If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $10,A) What level of output should the firm produce to maximize profits or minimize losses?B) What are the profits at the optimal output amount? C) Should the company produce this optimal amount or should it shut down?
The monthly average variable costs, average total costs, and marginal costs for Alpacky, a typical alpaca wool-manufacturing firm in Peru, are shown in the table below. All firms in the industry share the same costs as Alpacky, and the industry is in long-run equilibrium. Instructions: Round your answer to the nearest cent. The market price is $ Output (units of wool) 0 1 2 3 4 5 AVC ($) 25.00 35.00 21.50 19.67 ATC ($) 19.25 26.50 23.00 21.75 19.80 21.80 MC ($) 25.00 18.00 16.00 18.00 22.00
You are running a business in a perfectly competitive market. Your product sells for $5 and your marginal costs rise as output rises.(a) If the cost of producing another unit of output is $4, what should you do? What will happen to your profit?(b) If the cost incurred from your last unit of output produced is $6, what has happened to your profit? What should you do about this?(c) What general rule do the above examples suggest about how a firm should determine the level of output to produce so as to maximize profit?
An industry with many stores offer laminating as a service to their customers. Suppose that each store that offers this service has a cost function C(q)=50+0.5q+0.08q2 and a marginal costMC=0.5+0.16q. Suppose the going rate for laminating is R8.50 per sleeve which each store is compelled to charge. 1. Is the industry in long run equilibrium? Use calculations to either prove or disprove your findings.
A competitive firm faces the following market price: P=200. Variable costs are C(Q)=Q^2. The firm also pays $17000 in costs that do not depend on production (even if q=0). Hint – marginal cost is MC(Q)=2*Q NOTE - KEEP YOUR CALCULATIONS. THIS INFORMATION WILL BE USED IN MULTIPLE QUESTIONS What is the profit of this firm (ACCOUNTING profit, counting sunk costs as well) Question 7 options: 5000 0 -7000 -17000
A perfect competitive firm estimates her cost function as given below: C = 100 + 5Q2a. What is the firm’s fixed and marginal cost?b. If all other firms in the market sell the product at a price ¢20. How much should thisfirm charge for the product?c. What is the optimal level of output to maximize profits?d. How much profit will be earned?e. In the long run should this firm continue to produce or shut down? Why
1. Consider the perfectly competitive market for guitar tuners. The mar- ket price for a guitar tuner is $20 and the cost functions are: TC (q) = .01q² + .2q + 4950 %3D MC (q) = .02g +.2 (a) Find the profit-maximizing quantity of guitar tuners produced by a firm in this market. (b) Calculate the profit each firm will earn in this market (c) Graphically depict the firm's profit-maximization problem. (note: this doesn't need to be to scale but should accurately reflect the sign of the profit) (d) Will firms enter into this market in the long run? (e) Graphically show how the price will change as the market pro- gresses towards a long-run equilibrium. (There's no need to find the exact long-run equilibrium price. Just follow similar steps to what we did in class)
A firm in a competitive market has a short run cost curve given by C = Q° - 100? + 100Q + 100. (a) If the market price is 100, this firm would choose to OProduce a positive quantity in the short run, but leave the market in the long run OProduce a positive quantity in the short run and stay in the market in the long run OProduce 0 in the short run and leave the market in the long run OProduce 0 in the short run and stay in the market in the long run (b) What is the minimum price at which this firm would continue to produce in the short run? ONone of these O50 O25 O75
Note:Hand written solution is not allowed.
Market Representative Firm MC АТС $8 AVC A $6 MR = P %3D D1 20,000 100 125 Quantity (Q) Output (Q) The diagram above depicts overall market supply and demand on the left, and the cost curves for a representative firm supplying in that market on the right. When the market reaches its Long Run Equilibrium, we should expect the firm to produce and the equilibrium quantity in the market to be 125; less than 20,000 125; more than 20,000 100; less than 20,000 O 100; more than 20,000 Price
Problem 2: Suppose in a perfectly competitive industry that the market supply and demand forces combine to produce a short-run equilibrium price of $70. Suppose further that a single firm in this industry has a weekly total cost function expressed by the equation: (b) TC=200+50q - 6q² + (1/3)q³. What is this firm's profit maximizing level of output? What are its profits? At what level of (q) will this firm shut down its operations? At what level of (q) will the firm break even.
A firm operates in a perfectly competitive industry with the following totoal production function: π (q) TR(q) - TC(q) = 20q - TC(q) where TC(q) = 50 + 4q + 2q2 a) find the firm's demand and supply functions b)Find the profit maximizing output. Is the firm making above normal profits? c)What is the long-run equilibrium?

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS