You are a consultant on profit maximization. What do you recommend in each of the cases listed in the table below? Each firm operates in circumstances of pure (or perfect) competition, and wants to maximize its profit or minimize its loss. Enough information is supplied in each case, despite the blanks, to provide an answer. Answer for each case by putting one of the numbers 1 through 6 from the code below into the extreme right- hand column of the table. 1. Firm is now at correct position. 2. Firm should increase price. 3. Firm should decrease price. 4. Firm should increase quantity of output. 5. Firm should decrease quantity of output. 6. Firm should shut down operations. Case TR TC TFC TVC AC AVC MC ANSWER a. $10,000 $9,000 $1.80 $2.00 b. 1000 5000 $1,500 $5.50 5.00

You are a consultant on profit maximization. What do you recommend in each of the cases listed in the table below? Each firm operates in circumstances of pure (or perfect) competition, and wants to maximize its profit or minimize its loss. Enough information is supplied in each case, despite the blanks, to provide an answer. Answer for each case by putting one of the numbers 1 through 6 from the code below into the extreme right- hand column of the table. 1. Firm is now at correct position. 2. Firm should increase price. 3. Firm should decrease price. 4. Firm should increase quantity of output. 5. Firm should decrease quantity of output. 6. Firm should shut down operations. Case TR TC TFC TVC AC AVC MC ANSWER a. $10,000 $9,000 $1.80 $2.00 b. 1000 5000 $1,500 $5.50 5.00

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 3E

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Scenario 1-2Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats."Refer to Scenario 1-2. Using marginal analysis terminology, another economic term for the incremental cost of producing the last 300 hats is marginal cost. explicit cost. Any of the above terms are correct. operating cost.
1. Suppose there is a firm called Sebastian Industries that produces a product known as “Ortizs”. At q=0, the total cost is $200 and then increases by $20 for each additional unit produced. What is the FC? a) $0 b) $50 c)$100 d) $200 e) Not enough information 2. For q=10, what is the ATC? a) $0 b) $15 c) $30 d) $40 e) $55 3. Which of the following is NOT an example of a sunk cost? a) Purchase of a hamburger after starting to eat it b) Purchase of a movie ticket thirty minutes after the film has started c) Purchase of an item on Amazon...fifty days after delivery d) Purchase of a gallon of milk after you start drinking it e) Purchase of a new TV set with the receipt 4. Suppose we have another firm known as Sepanyan Corporation which makes a product known as Yeghias. Suppose the firm’s FC=$8,000 and its TC=$10,000 and its AVC=$5. What is the ATC? a) $25.00 b) $67.50 c) $100.25 d) $200 e) Not enough information 5. Which of the following is true concerning a competitive firm? a) It…
X 1 ences If the price of oats is $3.0 per kilo, calculate the total revenue and the total profit (or loss) at the quantities shown in below table. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Leave no cells blank - be certain to enter "0" wherever required. Mc Graw Hill Quantity (kilos) Total revenue Total cost Total profit $ 600 1800 $1,900 700 2100 $2,000 $ 800 2400 $2,400
/MC LATE 5 ZAVC 8 9 11 In the above figure, the left hand side graph represents a perfectly competitive industry and the right hand side graph represents a perfectly competitive firm. If the market price is $5, O the firms in the industry are making profit exactly equal to the normal rate of return. O the firms in the industry are making profit below a normal rate of return. O the firms in the industry are making profit above a normal rate of return. O the firms in the industry are making zero economic profits, so they should shut down.
This figure shows the marginal cost and marginal revenue curves for Beautiful Cars. Which of the following statements is correct, based on the information shown? Marginal cost and marginal revenue ($) 9,000 - 8,000 7,000- 6,000 5,000 4,000 3,000 2,000- 1,000 0 -1,000 0 B m 10 20 30 40 C Revenue is greater when Q = 10 than if Q = 20. O Profit is greater when Q- 20 than when Q-10. Marginal cost Marginal revenue D 50 60 70 80 When Q = 40, the marginal cost is greater than the marginal revenue so the firm's profit must be negative. O The firm would not choose to produce at point E because marginal profit is zero. Quantity of cars, Q
How would you calculate a firms total cost and total revenue using this graph?
The green line in the graph below represents a firm's long-run average cost without advertising, while the red line represents being with advertising. In a scenario where a firm runs advertising but it doesn't work or pay off, assuming they start at point A, where would a failed advertising campaign result? Cost Per Dish 3.50 (dollars) Point C O Point B O Point A O No point C 3.00 2.50 2.00 1.50 1.00 0.50 02 468 B 10 10 12 14 With advertising LRAC2 LRAC Without advertising 16 18 20 22 24 Quantity of Frozen Yogurt (thousands of dishes per month)
For second graph; suppose there are 10 firms in this industry, each of which has the cost curves previously shown.
Joe is the owner-operator of Joe's Haircuts Unlimited. Last year he earned $175,000 in total revenues and paid $110,000 to his employees and suppliers. During the course of the year, he received three offers to work for other barbers, with the highest offer being $60,000 per year. What are Joe's accounting profits? $110,000 $170,000 $65,000 $175,000 $60,000
Your niece is deciding whether or not to open a lemonade stand. She expects to sell 20 cups of lemonade for $1 per cup. She already made a sign that cost her $10 and will have $15 worth of additional costs for cups and lemonade mix if she decides to open the stand. If your niece decides to open the lemonade stand, how much profit will she earn? Show how you arrived at this number. Should she open the lemonade stand? What kind of cost is the $10 spent on the lemonade stand sign?
Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. Output TC MC ATC 50,800 $170,000 $0.60 100,800 220,000 1.10 150,800 257,500 1.71 200,800 365,500 2.45 Instructions: Enter your answers rounded to two decimal places. a. What is ATC per unit for each level of output listed in the table? Enter your answers in the table above. b. Are there economies of scale in production? Yes c. Suppose that the market price for a bottle of vitamins is $1.71. At that price the total market quantity demanded is 301,600,000 bottles. How many firms will be in this industry? firm(s) d. Suppose that, instead, the market quantity demanded at a price of $1.71 is only 150,800. How many firms will be in this industry? firm(s) e. Review your answers to parts b, c, and d. Does the level of demand determine…
Assume that the most efficient production technology available for making vitamin pills has the cost structure given in the following table. Note that output is measured as the number of bottles of vitamins produced per day and that costs include a normal profit. What is ATC per unit for each level of output listed in the table? Instructions: Round your answers to 2 decimal places. Output TC MC ATC 25,000 100,000 $ 0.50 50,000 150,000 1.00 75,000 187,500 2.50 100,000 275,500 3.00 Is this a decreasing-cost industry? (Click to select) Suppose that the market price for a bottle of vitamins is $2.5 and that at that price the total market quantity demanded is 75,000,000 bottles. How many firms will there be in this industry? firm(s). Suppose that, instead, the market quantity demanded at a price of $2.5 is only 75,000. How many firms do you expect there to be in this industry? ) firm(s). Review your answers to parts b, c, and d. Does the level of demand determine this industry's market…