Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 8, Problem 11SQP
To determine
The advice to be given to the owner of the firm.
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What is the term for the minimum level of output a firm must produce to cover its variable costs in the short run? a) Shutdown point b) Marginal cost point c) Average cost point d) Total cost point
The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit?
Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.
5
4
1
2
3
Output
Alpha Limited is a perfectly competitive firm. The total cost (in dollars) of producing Q
per day is given by the following cost function:
C(Q) - 10+5Q+Q²
Fixed
Cost
Variable
Cost
Total Cost ATC
AFC
AVC
MC
Chapter 8 Solutions
Economics For Today
Ch. 8.5 - Prob. 1YTECh. 8.5 - Prob. 2YTECh. 8 - Prob. 1SQPCh. 8 - Prob. 2SQPCh. 8 - Prob. 3SQPCh. 8 - Prob. 4SQPCh. 8 - Prob. 5SQPCh. 8 - Prob. 6SQPCh. 8 - Prob. 7SQPCh. 8 - Prob. 8SQP
Ch. 8 - Prob. 9SQPCh. 8 - Prob. 10SQPCh. 8 - Prob. 11SQPCh. 8 - Prob. 12SQPCh. 8 - Prob. 1SQCh. 8 - Prob. 2SQCh. 8 - Prob. 3SQCh. 8 - Prob. 4SQCh. 8 - Prob. 5SQCh. 8 - Prob. 6SQCh. 8 - Prob. 7SQCh. 8 - Prob. 8SQCh. 8 - Prob. 9SQCh. 8 - Prob. 10SQCh. 8 - Prob. 11SQCh. 8 - Prob. 12SQCh. 8 - Prob. 13SQCh. 8 - Prob. 14SQCh. 8 - Prob. 15SQCh. 8 - Prob. 16SQCh. 8 - Prob. 17SQCh. 8 - Prob. 18SQCh. 8 - Prob. 19SQCh. 8 - Prob. 20SQ
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- Derive theoretically and graphically the supply curve of an industry.arrow_forwardIf a firm's revenues do not cover its average variable costs, then that firm has reached its price taking point shutdown point marginal point opportunity marginarrow_forwardAn economist estimated that the cost function of a single-product firm is C(Q) = 100 + 20Q + 15Q² + 10Q³ Based on this information, determine: a. The fixed cost of producing 10 units of output. b. The variable cost of producing 10 units of output. c. The shutdown price if the optimal quantity of units produced is 10. d. The breakeven price if the optimal quantity of units produced is 10. g. The marginal cost when Q = 10. Think about your derivatives.arrow_forward
- The following diagram shows cost curves for a perfectly competitive firm. SMC 2.60 ATC AVC 1.60 1.50 0.80 0.70 0.60 500 800 1100 Output Price and cost (dollars)arrow_forwardTotal variable Quantity (dozens of sea shells per day) cost (dollars) 200 60.00 201 61.00 202 62.50 203 64.00 204 66.00 205 68.50 206 72.00 Sue's Sea Shells by the Sea Shore is a perfectly competitive firm selling sea shells at the market price of $2 per dozen. Sue's Sea Shells by the Sea Shore has fixed costs of $40 per day and a variable cost schedule in the table above. Based on this information, we can expect the number of firms in the sea shell market to a. increase. O b. remain constant. O c. decrease. O d. It is impossible to say.arrow_forwardCould I have help. I’m not understanding how to find the mc’sarrow_forward
- Consider a kettle firm A in a perfectly competitive market. Table 1 shows the quantity produced per hour (Q) and the total cost (TC) in the short run. Quantity 0 12345C70 2 6 8 Total cost 17 30 40 55 75 100 130 165 210 Fixed cost 17 17 17 17 17 17 17 17arrow_forwardIllustrate and explain the shape of the Long Run Industry Supply Curve for a Decreasing Cost Industry.arrow_forwardSuppose rocking chair manufacturing is a perfectly competitive industry in which there are 1,000 identical firms. Each firm's total cost is related to output per day as follows: Output Total Revenue ($) Total Variable Cost ($) Total Fixed Cost ($) 1 1,000 750 500 2 2,000 1,250 500 3 3,000 2,000 500 4 4,000 3,000 500 5 5,000 4,500 500 How many chairs would the firm produce at prices of $1,000? (In computing quantities, assume that a firm produces a certain number of completed chairs each day; it does not produce fractions of a chair on any one day.) chairsarrow_forward
- Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, materials, and promotional costs. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?arrow_forwardConsider the following cost curve for a firm in a competitive industry where the market price equals $150. C = + 6g + 1,500. What is the firm's marginal cost (MC)? MC =- (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the ^ character.) At what level of output does the firm maximize profits (minimize losses)? Profit is maximized at units of output. (Round your answer to two decimal places.) What is the firm's profit maximizing price? The profit-maximizing price is $- (Round your response the nearest dollar.) What is the firm's profit? The firm earns a profit of $. (Round your response to the nearest penny.) In the short-run, this firm should shut down produce E 20 étv MacBook Air 80 DII DD F2 F3 F4 F8 ! @ # 2$ & 2 3 4 5 7 8 9 Q W E R Y P A S D F G H K C V B M ption command comman Narrow_forwardConsider the following cost curve for a firm in a competitive industry where the market price equals $150. C =-9 + 6q + 1,500. What is the firm's marginal cost (MC)? MC =- (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the ^ character.) At what level of output does the firm maximize profits (minimize losses)? Profit is maximized at units of output. (Round your answer to two decimal places.) What is the firm's profit maximizing price? The profit-maximizing price is $. (Round your response to the nearest dollar.) What is the firm's profit? The firm earns a profit of $. (Round your response to the nearest penny.) In the short-run, this firm should DEC 20 étv MacBook Air 80 DII F2 F3 F4 F7 FB F9 @ %23 $ & 3 4 5 6 7 8 9 W E Y P S D F H J K ? C V N M command option nd .. .- リ * 00 Rarrow_forward
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