Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 8, Problem 1SQ
To determine
The profit of the firm at price OB.
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Suppose a perfectly competitive firm is operating in short run. The information of MR, Q, ATC and AVC are 25 taka, 60 unit, 35taka and 15taka respectively. Calculate firm’s profit/loss and total fixed cost. From these calculations and based on all the given information, can you conclude about the firm’s decision in short run? Explain your reasoning with the help of a suitable diagram. Show all the relevant information in your diagram.[Q=profit maximizing output and MR=marginal revenue].
Don,t copy from anywhere. Answer must be correct. Do step by step
A firm in a perfectly competitive industry knows the following about its costs and revenue. The firm would like to maximize
profit and has hired a consultant for advice.
Price
Q of Output
Total Revenue
Total Cost
Total Fixed Cost
10
500
TR?
9,400
TFC ?
Total Variable Cost
Average Total Cost
Average Variable Cost
MC
6,500
is at minimum level
AVC?
MC?
Total Revenue Number
Total Fixed Cost Number
Average Variable Cost Number
Marginal Cost Number
What is the value of the profit or loss (-) at the current output ( include the - sign if it's a loss) Number
Consultant's Advice: As a consultant, what advice would you give to this firm:(Choose ONE answer from the
following)
Number
1. Firm should do nothing; it is already profit maximizing/loss minimizing
2. Firm should reduce quantity of output
3. Firm should increase quantity of output
4. Firm should shutdown operations
5. The given number set is inconsistent
Answer the next question on the basis of the following cost data:
Output
Total
cost
1
40
2
54
87
4
124
190
13) Refer to the above data. Given a price of $33, the profit-maximizing level of output for this firm:
a. is 3.
b. is 4.
c. is 5.
d. cannot be determined from the information given.
3.
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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Similar questions
- A profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of production is $100, i.e. TFC = $100. Which of the following statements is true? a If the firm produced, the firm's revenues would have been lower than $100. bIf the firm produced, the firm's total variable cost must be lower than $100. cIf the firm produced, the firm's losses would have been higher than $100. dIf the firm produced, the firm's total variable cost would have been higher than $100.arrow_forwardQUESTION 10 Jack sells water bottles. Assume the market for water bottles is perfectly competitive. Jack sells his water bottles at the market price of $9.00. At the profit-maximising output level of 51 water bottles, Jack's average total cost is $4.40 per water bottle. The minimum average variable cost is $3.90 per water bottle. Answer the following questions: a. Jack's economic profit or loss is decimal places (ie: to the nearest cent). (use a negative value if a loss). Answer in dollars, rounded to two b. State whether the following statement is true or false: "At the profit-maximising quantity, Jack is making an economic profit of $4.60 per water bottle." Type T for true, or F for false c. State whether the following statement is true or false: "Jack should shut down if the market price is $3.85 per water bottle." Type T for true, or F for falsearrow_forwardQ5. Typical perfectly competitive firm with Total Cost Function TC 200 + 25Q - 6Q + (1/3)Q' , faces price of $70. Determine the profit-maximizing output and the amount of its short-run profits or losses.arrow_forward
- handwrittarrow_forwardA Milton company works in perfect competition market, its total cost curve in short run isgiven in this function:TC = 200 − 4Q + 0.5Q2a. What output level should the firm produce to maximize profit? knowing that averagerevenue is $10.b. What is the firm profit at this level of output?arrow_forwardA Milton company works in perfect competition market, its total cost curve in short run is given in this function:TC = 200 − 4Q + 0.5Q2a. What output level should the firm produce to maximize profit? knowing that average revenue is $10.b. What is the firm profit at this level of output?arrow_forward
- Farmer Brown grows blueberries. The average total cost, average variable cost, and marginal cost of growing blueberries for an individual farmer are illustrated in the graph to the right. Farmer Brown will incur losses if the market price falls below $ per crate. (Enter a numeric response using an integer.) Furthermore, farmer Brown should shut down in the short run if the market price falls below $ per crate. C Price and cost (dollars per crate) 40- 36- 32- 28- 24- 20- 16- 12- 8- 4 0 MC AT AVI 90 10 20 30 40 50 60 70 80 Quantity of blueberries (crates per week) 1arrow_forwardAccording to the figure above: a. Is the firm maximizing economic profit? b. What is the firm's short run shutdown price?arrow_forwardB) Consider a perfectly competitive firm with the following short-run total costs: SRTC = b + j q x. The corresponding short-run marginal cost is given by:SRMC = xj q x-1. 1. If the market price is n, how much output (q) will the firm produce? What will thefirm’s profits are at a price of n? 2. Find the quantity of output for which marginal cost equals average variable cost.What does this information tell you about this firm’s decision about whether toshut down in the short run rather than produce a positive quantity of output?arrow_forward
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