Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 7MC
To determine
Profit.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Currently 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) output
Tomato Farms is selling tomatoes in a purely competitive market. Its output is 25,000 bushels, which sell for $30 a bushel. At this level of output, the marginal cost is $30 a bushel, average variable cost is $30.50 a bushel, and average total cost is $34.50 a bushel.
(a) What is the firm’s total fixed cost? You must show your work.
A breakfast place, a perfectly competitive eatery, sells its special for $5. Cost of waiters, cooks, and power average out to $3.95 per meal; cost of lease, insurance and other expenses average out to $1.25 per meal. What should this owner do. A)close her doors immediately b)continue producing in the short and long run c)continue producing in the short run, but plan to go out of business in the long run if price does not increase in the future d)raise her prices above the perfectly competitive level e)lower her output
Chapter 9 Solutions
Managerial Economics: A Problem Solving Approach
Knowledge Booster
Similar questions
- A competitive firm is maximizing its profit by selling 150 units of output. The firm’s marginal cost is $8 and its average total cost is $6. The firm’s profit amounts to what?arrow_forwardPrice is $6. A firm is producing the output level at which average total cost equals marginal cost, both of which are $8. Average variable cost is $4. To maximize its profits in the short run, the firm should a. Decrease its output. b. Expand its output. C. Leave its output unchanged. d. Shut down.arrow_forwardJo sells beautiful flower bouquets at the Sunday markets. Assume the market for flower bouquets is perfectly competitive. Jo sells her bouquets at the market price of $50. At the profit-maximising level of 57 bouquets, Jo's average total cost is $41 per bouquet. The minimum average variable cost is $38 per bouquet. Answer the following questions: a. Jo's economic profit or loss is dollars. (use a negative value if a loss). Answer in b. State whether the following statement is true or false: "At the profit-maximising quantity, Jo is making an economic profit of $9 per bouquet." Type T for true, or F for false c. State whether the following statement is true or false: "Jo should shut down if the market price is $40 per bouquet." Type T for true, or F for falsearrow_forward
- Question 14 Ma owns a pizza shop with AVC = $70 and ATC = $98. It is a competitive market and the market price for pizza is $95. Mr. Ma should A: exit the market in both the short-run and long-run. B: continue his business in both the short-run and long-run. C: continue his business in the short-run but exit in the long-run if the situation continues. D: shut down his business in the short-run but continue in the long-run if the situation continues.arrow_forwardDraw the cost curves for a typical firm. For a given price, explain how the firm chooses the level of output that maximizes profit. At that level of output, show on your graph the total revenue of the firm. Show its total costs.arrow_forwarda. What is its profit?b. What is its marginal cost?c. What is its average variable cost?d. Is the efficient scale of the firm more than, less than, or exactly 100 units? use this to solve A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200.arrow_forward
- Firms in the market for dog food are selling in a purely competitive market. A firm producing dog food has an output of 10,000 pounds of dog food, for which it sells for $0.50 a pound. At the output level of 10,000 pounds the average variable cost is $0.40, the average total cost is $0.70, and the marginal cost is $0.50. (a) What would you expect the firm to do in the short run? Explain.arrow_forwardSolve all this question......you will not solve all questions then I will give you down?? upvote.....arrow_forwardFirms in the market for dog food are selling in a purely competitive market. A firm producing dog food has an output of 10,000 pounds of dog food, for which it sells for $0.50 a pound. At the output level of 10,000 pounds the average variable cost is $0.40, the average total cost is $0.70, and the marginal cost is $0.50. What do expect will happen in the long-run? Explain.arrow_forward
- A perfectly competitive firm's short-run supply curve is the same as Selected Answer: b. the market demand curve. Answers: a. the supply curve of all the other firms in the industry. b. the market demand curve. c. the marginal cost curve. d. the portion of its average variable cost curve above the average total cost curve. e. the portion of its marginal cost curve above the minimum average variable cost.arrow_forwardRose growing is perfectly competitive and all growers have the same costs. The market price is $27 a bouquet and each grower maximizes profit by producing 2,700 bouquets a week. Average total cost is $21 a bouquet and average variable cost is $17 a bouquet. Minimum average variable cost is $9 a bouquet. What is the economic profit that each grower is making in the short run? In the short run, each grower is of $a week. >>> If the firm incurs an econom window and do not enter a minus sign. making an economic profit incurring an economic lossarrow_forwardFor a perfectly competitive firm, profit maximization happens at: A. P=MC B. AR=MC C. MR = ATC D. MR = AVC The perfectly competitive firm will produce in the A. long run if price is below average variable cost. B. short run if price is below average variable cost. C. long run if price is below average total cost but above average variable cost. D. short run if price is below average total cost but above average variable cost.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning