You run a firm using two rented machines, the cost of rent is 100 each. Wage per worker (L) is 200. The output table is as follows: L (workers) Q 0 0 11 4 10 14 2 3 4 5 6 17 Answer: 19 20 If the price is $67, how much is your profit?
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- a) Find the long run equilibrium price. Find the minimum efficient scale of the typical firm. Find the typical firm’s average cost when it operates at minimum efficient scale. In the long run, what price will prevail in this market? In words, clearly justify your answer. Suppose demand is QD = 3,200 – 100P. (b) Explain why you expect the number of firms in this market to be fifty-five. In this market, what is the short run supply function of the typical firm? What is the short run market supply function? Suppose the local government introduced a $90 licensing fee that raised the fixed cost from $160 to $250. c) Would the introduction of the licensing fee affect the short run equilibrium price or quantity? Justify your answer? Clearly explain why you expect that in the long run fewer larger firms will operate in this market. After the introduction of the licensing fee, what is the new long run equilibrium price? How many firms will survive in this market?Consider a small landscaping company run by Mr. Viemeister. He is considering increasing his firm’s capacity. If he adds one more worker, the firm’s total monthly revenue will increase from $50,000 to $62,000. If he adds one more tractor, monthly revenue will increase from $50,000 to $58,000. Each additional worker costs $4,000 per month, while an additional tractor would also cost $4,000 per month. Instructions: Enter your answers as a whole number. a. What is the marginal revenue product of labor? $ The marginal revenue product of capital? $ b. What is the ratio of the marginal revenue product of labor to the price of labor (MRPL/PL)? : What is the ratio of the marginal revenue product of capital to the price of capital (MRPC/PC)? :An employer who employs m workers determines that they produce: units of that product daily. Total income (in dollars) is given by: 1) ¿What is the price, per unit, when there are 30 workers? 2) Determine the marginal revenue when there are 30 workers. 3) The product of marginal income corresponds to the rate of change of income with respect to the number of active employees, at a given moment. Determine the product of marginal revenue when m = 30
- 4 total cost is c(4, r, q) 5 total 75. If Firm A has constant marginal cost, and input prices double to 2r and 2w, how much will it cost to produce q 6 units of output (what is c(6, 2r, 2w))? (HINT: First calculate the marginal cost for c(q, r, w), then calculate c(6, r, w), and then calculate c(6, 2r, 2w)) = Firm A has cost function c(q, r, w). At output q = cost is c(5,r, q) ○ c(6, 2r, 2w) ○ c(6, 2r, 2w) = 90 ○ c(6, 2r, 2w) = 150 c(6, 2r, 2w) O c(6, 2r, 2w) = 180 - = - 75 160 = 60, and at output q -1 Mario owns a wood-fired pizza shop which imitates traditional Italian methods. She uses a unique sauce that attracts a loyal following of customers. The demand for her pizzas is q = 1650 – 250p, and her costs are TC 0.72+0.0035q. q is the number of pizzas sold per week, TC(q) is Maria's weekly total cost, and p is the price of a pizza. a) What price and output will Maria choose to maximize profits? b) Maria returns to college and asks her cousin Victor to manage her pizza business. Victor faces the same demand and cost conditions as Maria, but he decides to maximize revenue. What price and output should he choose?10) If marginal revenue equals marginal cost, the firm is maximizing profits as long as A) the average cost curve lies above the demand curve. B) the resulting profits are positive. C) marginal cost exceeds marginal revenue for greater levels of output. D) All of the above are required. $1q 15 1110 40 MC AC AVC q I= H 11) The above figure shows the cost curves for a competitive firm. If the firm is to earn economic
- A firm produces 220 units of a good which cost an average of £8.25 each to produceand sells them at a price of £9.95. What is its total profit?Suppose a firm is able to sell their product for a price of $10. You have the following information on the firm's output and cost Output 500 $70 $100 Implicit Costs Explicit Costs Instructions: Enter amounts as a whole number. If the firm is earning a loss indicate with a negative sign (-). What is the firm's economic profit? $Assume that a firm’s marginal revenue curve intersects the rising portion of its marginal cost curve at 500 units of output. At this output level, a profit-maximizing firm’s total cost of production is $1,000. If the price of the product is $5 per unit, the total revenue earned by the firm will be:
- Using the data in the following table, show what happens to the firm's output choice and profit if the fixed cost of production increases from $100 to $150 to $170, where q is quantity and C is total cost. Assume that the price of output is $62. MC q 0 1 2 3 4 5 6 7 8 9 10 11 If the fixed cost of production is $100, then output will be 50 28 20 14 18 20 22 38 45 55 65 C (FC = $100) 100 150 178 198 212 230 250 272 C (FC = $150) 150 200 228 248 262 280 300 322 310 360 355 405 410 460 475 525 units (enter your response using an integer) C (FC = $170) 170 220 248 268 282 300 320 342 380 425 480 54510 ATC ATC2 ATC3 ATC, 2 2 4 6 8 10 Quantity (thousands of copies per day) A copy shop is choosing between four different operational sizes (ie, plant size). The average total cost curve for each option is shown in the graph. If the market demand for copies is 12,000 copies per day, how many copy shops would you expect to see in this market? The answer depends on the price of a copy, which is unknown. O 1 (because the copy shop will become a monopoly with a large quantity demanded) O (because the copy shop can't produce 12,000 copies efficiently and will shutdown) 3 (with each shop supplying 4000 copies per day) 8, 6 Average cost (cents per copy)8.* The profit of a firm depends on its use of a factor x and a parameter a according to f(x, a), increasing in a. The prices of the output and factor are p>0 et w > 0. Does the maximum profit of the firm increase or decrease if a increases? Why?
