Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 8, Problem 14SQ
To determine
The profit-maximization level of output of the firm.
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8.
The table below shows the short-run cost data of a perfectly competitive firm that
produces plastic camera cases. Assume that output can only be increased in batches
of 100 units.
Quantity
0
It must fall.
100
200
300
400
500
600
It must rise to offset the increased cost.
Total Cost Variable Cost
(dollars)
(dollars)
$1,000
$0
1,360
360
1,560
560
1,960
2,760
4,000
5,800
Suppose the fixed cost of production rises by $500 and the price per unit is still $8.
What happens to the firm's profit-maximizing output level?
The firm will shut down.
O It will remain the same.
960
1,760
3,000
4,800
Suppose a firm's marginal cost is increasing as it produces more output. Then the firms is said to be experiencing which of the following?
a.increasing returns to scale
b.diminishing returns to scale
c.losses
d.profit
Chapter 8 Solutions
Micro 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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- In a perfectly competitive market there is a donut shop that sells 1,200 donuts daily. Each donut sells for the market price of $0.75 and they sell out every day. Assume that this company has labor costs of $275 and materials costs of $400. a. Using only variable costs, what is the donut shop’s daily profit? - Now assume that the owner is thinking of adding a second location downtown. The capital investment required is $4,000. The normal rate of return is 5%. b. If the new shop could operate under the same conditions as the original location is it a good business decision to expand? c. What would be the new shop’s daily profit?arrow_forwardThe long-run ATC curve of a competitive firm derives its shape from: * decreasing, then increasing, short-run returns. increasing, then decreasing, short-run returns. economies, then diseconomies, of scale. diseconomies, then economies, of scale.arrow_forwardCurrently the firm is producing at a profit maximizing quantity of output and has a total revenue of $5000. Variable costs are $4000 and Fixed costs are $2000. Which of the following is true for this firm in the short run: A. The firm should continue producing at a loss B. The firm should shut down immediately C. The firm should continue to produce since it is making profit D. The firm should adjust (increase or decrease) outputarrow_forward
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