Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 8, Problem 2.7P
To determine
The marginal cost curve and the profit maximizing level of output.
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What would be the value of economic profit if explicit cost is $200, implicit cost is $150 and total revenue is $800
For the pizza seller whose marginal, average variable, and average total cost curves are shown in the graph below, what is the profit-maximizing level of output and how much profit will this producer earn if the price of pizza is $1.50 per slice?Instructions: In the graph below, label all three curves by clicking on the dropdown to select the appropriate label.
Instructions: Enter your response as a whole number. If you are entering a negative number, be sure to include a negative sign (−).
When the price is $1.50 per slice, the profit-maximizing level of output is slices per day.
Instructions: Enter your response rounded to the nearest penny (two decimal places).
At the profit-maximizing level of output, the producer's profit is: $ per day.
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Chapter 8 Solutions
Principles of Economics (12th Edition)
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- Suppose Larry runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Larry's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Larry produces, including zero shirts. 125 100 TOTAL COST AND REVENUE (Dollars) 25 ☐ Total Cost ☐ -50 0 1 2 3 4 5 6 7 8 QUANTITY (Shirts) Total Revenue A Profit (?) Calculate Larry's marginal revenue and marginal cost for the first seven shirts he produces and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. 25 2 COSTS AND REVENUE (Dollars per shirt) 0 1 2 3 5 6 7 8 QUANTITY (Shirts) Marginal Revenue Marginal Cost Larry's profit is maximized when he produces is shirts. When he does this, the marginal cost of the previous shirt he…arrow_forwardThe cost function for Acme Laundry is C(q) = 50 + 30q +q?, where q is tons of laundry cleaned. What q should the firm choose so as to maximize its profit if the market price is p? The output level at which the firm's profit is maximized as a function of p is q =|- (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a fraction can be created with the / character.) If p= 60, then Acme Laundry should produce| units. (Enter your response as a whole number.)arrow_forwardAt what level of production does the marginal cost have the least value? What is the marginal cost at this level of production?arrow_forward
- Why is a normal profit considered an economic cost?arrow_forwardWhat will be the marginal cost if the change in total cost is $55 and Change in quantity is $60.arrow_forwardThe graph shows the Cost curves for a profit maximizing firm in a competitive market. If the market price is $30 and the firm produces at the profit maximum quantity, what is the amount of the total fix costarrow_forward
- For the pizza seller whose marginal, average variable, and average total cost curves are shown in the graph below, what is the profit- maximizing level of output and how much profit will this producer earn if the price of pizza is $0.50 per slice? Instructions: In the graph below, label all three curves by clicking on the dropdown to select the appropriate label. Enter your responses as whole numbers. Price ($/slice) 3.50 3.25 3.00 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0 Cost Curves MC ATC Quantity (slices/day) AVC L 100 200 300 400 500 600 700 800 900 o When the price is $0.50 per slice, the profit-maximizing level of output is o slices per day. At the profit-maximizing level of output, the producer's profit is: $ 225 per day.arrow_forwardHand written solutions are strictly prohibitedarrow_forwardexplain why a firm might want to produce its good even after diminishing marginal returns have set in and marginal cost is rising ?arrow_forward
- When the marginal cost curve intersects the average variable cost curve, which of the following is true? Marginal cost is equal to marginal revenue. This is the quantity a firm would choose to produce in the short run. Average total cost is at its lowest point. Average total cost is at its highest point. Average variable cost is at its lowest point.arrow_forwardFind the marginal cost, marginal revenue, and marginal profit functions. C(x) = 4x²; R(x) = x³ + 5x + 11 marginal cost marginal revenue marginal profit Find all values of x for which the marginal profit is zero. Interpret your answer. (Enter your answers as a comma-separated listarrow_forwardIsabella grows pumpkins. Her average variable cost (AVC), average total cost (ATC), and marginal cost (MC) of production are illustrated in the figure to the right. Assume the market for pumpkins is perfectly competitive and that the market price is $5.00 per box. How many pumpkins should Isabella grow? Isabella should produce integer value.) thousand boxes of pumpkins. (Enter your response as an Price ($ per box) 10.00- MG ATC AVC 9.00- a 8.00- G 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 2 3 5 6. Quantity (boxes in thousands)arrow_forward
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