Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 15, Problem 6IAPA
To determine
The output level, economic profit and the number of firms in long run to be determined.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The figure below shows the demand and costs facing Mike's Bikes, a producer of
mountain bikes. What quantity does the firm produce and what is its price? Calculate
the firm's economic profit or economic loss.
Price and cost (dollars per bike)
400
350
300
250
200
150
100
50
MC
ATC
MR
100
200
Quantity (mountain bikes per week)
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$200 per bike, and economic loss is $10,000.
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$250 per bike, and economic loss is $5,000.
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$200 per bike, and economic profit is $5,000.
Quantity produced is 100 mountain bikes per week, price of a mountain bike is
$250 per bike, and economic profit is $5,000.
3. Johnny Rockabilly has just finished recording his latest CD. His record company's marketing department determines that the demand for the CD is as follows:
Price Number of CDs
$24
10 000
22
20 000
20
20
30 000
18
40 000
16
50 000
14
60 000
The company can produce the CD with no fixed cost and a variable cost of $5 per CD.
a. Find total revenue for quantity equal to 10 000, 20 000, and so on. What is the marginal revenue for each 10 000 increase in the quantity sold?
b. What quantity of CDs would maximize profit? What would be the price? What would be the profit?
c. If you were Johnny's agent, what recording fee would you advise Johnny to demand from the record company? Why?
At a market price of $83 a batch, what quantity does Lin’s produce and what is the firm’s economic profit in the short run? Do firms enter or exit the market and what is Lin’s economic profit in the long run?
Chapter 15 Solutions
Foundations of Economics (8th Edition)
Ch. 15 - Prob. 1SPPACh. 15 - Prob. 2SPPACh. 15 - Prob. 3SPPACh. 15 - Prob. 4SPPACh. 15 - Prob. 5SPPACh. 15 - Prob. 6SPPACh. 15 - Prob. 7SPPACh. 15 - Prob. 8SPPACh. 15 - Prob. 9SPPACh. 15 - Prob. 10SPPA
Ch. 15 - Prob. 11SPPACh. 15 - Prob. 1IAPACh. 15 - Prob. 2IAPACh. 15 - Prob. 3IAPACh. 15 - Prob. 4IAPACh. 15 - Prob. 5IAPACh. 15 - Prob. 6IAPACh. 15 - Prob. 7IAPACh. 15 - Prob. 8IAPACh. 15 - Prob. 9IAPACh. 15 - Prob. 10IAPACh. 15 - Prob. 11IAPACh. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Prob. 3MCQCh. 15 - Prob. 4MCQCh. 15 - Prob. 5MCQCh. 15 - Prob. 6MCQCh. 15 - Prob. 7MCQCh. 15 - Prob. 8MCQ
Knowledge Booster
Similar questions
- The graph shows the revenue and cost curves for an individual producer in the maple syrup industry. The demand for maple syrup increases and the market price rises to $40 a gallon. On the graph, draw the maple grower's marginal revenue curve and label it MR₁. Draw a point to show the grower's profit-maximizing price and quantity in the short run. Also show the grower's economic profit or economic loss in the short run and label it. >>> Draw only the objects specified in the question. Price and cost (dollars per gallon) 60 55- 50- 45- 40-40 35- 30- 25 100 200 300 400 500 MC ATC MRO 600 600 700 800 900 Quantity (thousands of gallons per year) B Select Line Point ☐ Rectanglearrow_forwardThe situation facing by firm "Smart", a producer of running shoes, is shown in the following figure. 100 MC ATC 80 60 40 20 MR 50 100 150 200 Quantity (pairs of running shoes per week) a. What quantity does Smart Shoes produce? Answer: b. What is the price of a pair of Smart shoes? Answer: c. What is Smart's economic profit or economic loss? Answer: Why MR curve is below to demand curve Price and cost (dollars per pair) 8arrow_forwardThe next 6 questions relate to the following table. Calculate total revenue at a quantity of 5 units. (The table gives you Quantity, Price, and Total Costs, leaving the Total Revenue and Profit for you to calculate.) Quantity Price Total Revenue Total Cost Profit 0 70 0 1 70 60 2 70 120 3 70 180 4 70 300 5 70 410 Calculate profit at an output of 4 units. What is the highest profit possible? What is the profit maximizing level of output What is the profit maximizing price? Can you tell if this is the short run or long run? Explain.arrow_forward
- Hannah has a small business making clothing alterations. Which of the following products would dramatically affect her profit margins if the price were to decrease for that product? A. dresses B. thread C. sewing machinesarrow_forwarda. Graph a purely competitive market showing the point of equilibrium at a price of $150 and a total product of 400,000. b. Next to this graph, graph the purely competitive firm. What price will the firm charge for the product? Will they charge $150, less than $150, or more than $150? c. Show the demand, average revenue, and marginal revenue curve on the graph for the firm. d. Show the profit maximizing quantity for the firm at 250 units of output, or tp. e. Show this firm making a profit of $5,000, making sure to solve for the numerical value for the ATC at the quantity, or tp, of 250, and showing the profit area on the graph.arrow_forwardMarginal Revenue, Marginal Cost, Marginal Profit: MR=MC MC Marginal Profit 0 quantity (firm) 3:57 / 4:19 YouTube E} CC 74. In the video, when MC > MR, what action should the firm take to Maximize Profit. Select one: a. Increase Price b. Decrease Quantity c. Decrease Price d. Increase Quantity Check Costs & Revenuesarrow_forward
- Q2. Ramzah owned a burger stands along the beach. Figure 2 shows Ramzah’s cost curves. Figure 2: Market for Burger (a) What is Perfect Competition? (b) If the market price of a burger is $4, what is Ramzah’s profit-maximizing output? (c) Calculate the economic profit that Ramzah’s makes. (d) With no change in demand or technology, how will the price change in the long run? (e) Distinguish between technological efficiency and economic efficiency.arrow_forward7.a. What is the market price of a smoothie? 7.b. What is the market quantity of smoothies? 7.c. How many smoothies does each firm sell? 7.d. What is the economic profit made or economic loss incurred by each firm? Output (smoothies per hour) 5 6 2 7 8 9 Price (dollars per smoothie) 1.90 2.00 2.20 2.91 4.25 5.25 5.50 Marginal cost (dollars per additional smoothie) 2.50 2.20 1.90 2.00 2.91 4.25 8.00 Quantity demanded (smoothies per hour) 1,000 950 3.00 3.33 800 700 550 400 300 Average Average variable total cost cost (dollars per smoothie) 4.00 3.53 3.24 3.00 2.91 7.33 6.03 5.24 4.67 4.34 4.25 4.44arrow_forwardThe graph shows the marginal cost and average total cost for Copy Central, a perfectly competitive firm. Recall that in perfect competition, price equals marginal revenue. Fill in the blanks.arrow_forward
- i need answer urgentarrow_forwardAt a market price of $35.20 a batch, what quantity does Lin’s produce and what is the firm’s economic profit in the short run?arrow_forwardThe figure depicts the demand curve of a firm producing cars, together with its marginal cost, average cost, and isoprofit curves. Based on this figure, which of the following statements are correct? 8,000 Price, Marginal cost ($) 0 E Quantity of cars, Q At A, the firm makes positive profits. The firm makes the same profit at B and D. O Profit margin is the same at B and D. O The slope of the isoprofit is zero at D. MC Isoprofit A Isoprofit B AC 100arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning