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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Chapter 9, Problem 1.4P
To determine
The total revenue and total cost.
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You are given the following cost data:The total fixed costs are $100.(Photo)If the price of output is $15, how many units of output will this firm produce? What is total revenue? What is total cost? Briefly explain using the concept of marginal cost. What do you think the firm is likely to do in the short run? In the long run?
Select one:a. Profit maximizing Quantity=3b. Profit maximizing Quantity=1c. Profit maximizing Quantity=0d. Profit maximizing Quantity=6
Notes for graph: MC is marginal cost, MR is marginal revenue, ATC is average total cost, AVC is average variable cost and D is the demand curve.
To maximize the profit, how many units should the firm produce? At what price?
Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost?
Will you operate this firm in the short run? Long run? Briefly explain.
-Briefly discuss average costs, including how they are calculated, how they are typically appear on a graph, and what they relate to profitability.
-Briefly explain what is meant by the term "fixed costs" and provide three examples of same. What determines a firm's level of fixed costs?
-Briefly explain what is meant by the term "variable costs" and provide three examples of same.
-Briefly explain how the total revenue for a profit-seeking firm is determined.
Chapter 9 Solutions
Principles of Economics (12th Edition)
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Similar questions
- The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity-0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to drawit. To refer to the graphing tutorial for this question type, please click here Price and cost 18 15 14 13 12 10 19/21 SUBMIT ANSWER 13 OF 21 QUESTIONS C OMPLETED 28 MacBook Pro 금□ F7 F8 F9 F1o F2 F3 F5arrow_forwardUsing the following graph of the cost curves for a firm. Complete the statement below. yice MC AC AVC 15 AFC Qutity Which best describes the firms short run capacity? MC = AFC MC = AVC AVC = ATC AVC = AFC MC = AC Using the following graph of the cost curves for a firm. Complete the statement below. yice MC AC AVC 15 10 AFC Qurtity Which price would best describe the firm is making an economic profit? 15 10 8 5 Using the following graph of the cost curves for a firm. Complete the statement below. yice AC AVC 15 10 5 AFC Qurtity Which price would best describe the break even point for this firm? O 15 12.5 10 16 Using the following graph of the cost curves for a firm. Complete the statement below. yice MC AC AVC 15 10 AFC Quantity Which price would best describe the shut down condition for this firm? 15 12.5 16 10 10 5 5arrow_forward9:20 Today Вack Edit 9:18 PM 9. You are given the following cost data: TFC TVC 12 1 12 5 12 9. 3 12 14 4 12 20 12 28 12 38 If the price of output is $7, how many units of output will this firm produce? What is the total revenue? What is the total cost? Will the firm operate or shut down in the short run? in the long run? Briefly explain your answers.arrow_forward
- The graph shows the cost curves for a perfectly competitive firm. If the market price of the product is $1.25 per unit, then the firm will earn how much profit per unit in the short run?arrow_forward"In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.arrow_forwardRelated to the Economics in Practice on page 195: If firms have long-run average cost curves with a long, flat section, larger firms have a cost advantage over smaller firms. the optimal number of firms in the industry is one. their long run supply curves are downward sloping. it is impossible to predict the size of the firm.arrow_forward
- The following graph shows the demand curve, as well as the AVC, ATC and MC curves of a company selling rolled oats in a perfectly competitive market. Use the graph to answer the questions. The goal of the company is to maximize its profit. How many boxes of rolled oats should it sell to attain this goal? What price will it charge? How much profit does this firm make per month? Will this company produce or shut down in the short run? Why? Will this firm exit the market for rolled oats in the long run or not? Why?arrow_forwardHi. I'm a little confused on how the short run supply curve of a price taking firm is determined. Do i use the marginal costs and the average variable cost curves and use the diagram for that to find the short run supply curvearrow_forwardThe table shows some cost data for Frank's Fortune Cookies which operates in a perfectly competitive market. At a market price of $42.83 a batch, what quantity does Frank's produce and what is the firm's economic profit in the short run? When the market price is $42.83 a batch, Frank produces batches of cookies. When Frank produces 6 batches of cookies, Frank's economic profit is $ Total Average Average product (batches fixed cost variable Average cost total cost Marginal cost per day) (dollars per batch) 1 77.00 45.00 122.00 31.00 2 38.50 38.00 76.50 23.01 3 25.67 33.00 58.67 20.99 4 19.25 30.00 49.25 26.00 5 15.40 29.20 44.60 33.98 6 12.83 30.00 42.83 51.02 7 11.00 33.00 44.00 77.04 8 9.63 38.50 48.13arrow_forward
- answer all partsarrow_forwardA firm's output, variable costs, and total costs are given in the table below. Instructions: Round your answers to the nearest dollar. a. Calculate marginal cost using the formula given in the chapter: A total cost / A quantity. Variable cost ($) Total cost ($) Marginal cost ($) 0 100 50 150 80 180 220 280 360 Quantity 0 1 2 3 4 5 120 180 260 b. Calculate A variable cost / A quantity. Quantity 0 1 2 3 4 5 Variable cost ($) 0 50 80 120 180 260 Total cost ($) 100 150 180 220 280 360 A variable cost / A quantity ($)arrow_forwardAre there fixed costs in the long-run? Explain briefly.arrow_forward
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