10 A competitive firm has the following total cost function: TC(q) = 10 + q if q>0, TC(q) = 0 if q = 0. The firm has a capacity constraint: It cannot produce more than q = 20. Let P denote the price of the firm's output. When P = 2, the firm will produce a b C d e q = 20 units. q = 0 units. q = 11 units. q = 10 units. Cannot be computed from the information given.
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- The following table gives information about a firm’s short-run cost function in a perfectly competitive industry – candy manufacturing. a) What quantity will the firm supply when price of candy is $2? When price is $5? When price is $8? b) Consider the case where price = $2. Suppose that you have been renting capital (a candy-making machine) for a long time under a long-run capital rental agreement, but now the rental contract is about to expire. Should you renew your capital rental contract or not? Explain why or why not. How would your answer change if price is $5? How would your answer change if price is $8? Quantity Total Cost Average Variable Cost Average Total Cost Marginal Cost 0 10 1 15 5 15 5 2 17 3.5 8.5 2 3 18 2.66667 6 1 4 20 2.5 5 2 5 25 3 5 5 6 33 3.83333 5.5 8An industry with many stores offer laminating as a service to their customers. Suppose that each store that offers this service has a cost function C(q)=50+0.5q+0.08q2 and a marginal costMC=0.5+0.16q. Suppose the going rate for laminating is R8.50 per sleeve which each store is compelled to charge. 1. Is the industry in long run equilibrium? Use calculations to either prove or disprove your findings.Suppose you are the economic advisor of Jackie Brown Company, a perfectly competitivecompany that is suffering economic losses due to unforeseen continuous drop in the market price.Jackie Brown is a price taker; hence it cannot influence the market price, nor could it changeproduction technology in the short run. You are asked to decide whether the company should shutdown its operations or to continue to operate at a loss. Jackie Brown is selling 50 units of outputper day, at a price of $20 per unit. The cost of raw material, direct labor, energy, and othervariable inputs is about $24000 monthly. Unfortunately, an estimate of Jackie Brown fixed costs iscurrently unavailable. So, what is your decision?
- What are total fixed costs for the Zonker Company? $0 $8 $12 $20 2. The marginal cost to the Zonker Company of producing the third unit of output is $__________ and the marginal cost of producing the sixth unit of output is $__________. $10; $25 $36; $93 $24; $81 $25; $40 3. If the market price is $15 per unit and Zonker can sell all it wants at that price, then Zonker maximizes profit in the short run by producing __________ units per week. 5 3 4 0 4. If the market price fell to $11 per unit, Zonker maximizes profit in the short run by producing __________ units per week. a. 1 b. 2 c. 3 d. 0 5. The lowest short run average total cost for Zonkers occurs when they produce ________ units per week. 2 3 4 5 6. if the price-taking firm in Exhibit 0126 is currently producing 6 units, then to maximize profits in the short run, it should keep producing 6 units increase production to 13 units increase production to 14 units increase production…A firm in a perfectly competitive market faces a market price of $80, and has a total cost function: TC(Q) = Q3 – 28Q2 + 245Q + 1000. A. If the firm charges $85, how many units will they sell? B. If this firm produces Q = 15, is their profit maximized? C. If these are short run conditions and the firm is producing Q = 15, should the firm stay open or shut down temporarily? Clearly show or explain your reasoning.Suppose a perfect competitive firm’s total cost curve and marginal cost curve are TC= Q2+ 4Q+100 Also suppose that the market equilibrium price is given as $20. A. Find equations for the firm’s fixed cost (FC), variable cost (VC), average total cost (ATC), average variable cost (AVC) and Marginal cost (MC). B. Find the output level that minimizes average total cost (ATC). C. Calculate the price below which a firm in the market will not produce any output (the shutdown price).
- Q)Assume that a competitive firm has the total cost function: TC=1q^3−40q^2+740q+1600 Suppose the price of the firm's output (sold in integer units) is $650 per unit. Create tables (but do not use calculus) with columns representing cost, revenue, and profit to find a solution. A. How many units should the firm produce to maximize profit? B. What is the total profit at the optimal output level? Please specify your answer as an integer.Suppose that a perfectly competitive industry consists of 240 firms and fixed cost of an individual firm is 384 half of which is a sunk fixed cost while the average variable cost is 12q. Market demand is given by Q-1440-10P. Find the equilibrium output and profit, respectivelySunrise Juice Company sells its output in a perfectly competitive market. The firm's total cost function is given in the following schedule: Output Total Cost (Units) ($) 0 50 10 120 20 170 30 210 40 260 50 330 60 430 Total costs include a "normal" return on the time (labor services) and capital that the owner has invested in the firm. The prevailing market price is $7 per unit. (a) Prepare (i) marginal cost and (ii) average total cost schedules for the firm. (b) What is the firm's profit maximizing output level? (c) Is the industry in long-run equilibrium? Justify your answer.
- A firm in a perfectly competitive industry has fixed costs of FC = 15, marginal costs of MC = 5 + 14q, and average variable costs of AVC = 5 + 7q. (a) What are the firm’s variable costs (VC)? (b) What is the firm’s total cost function? (c) If the price is $75, how much does the firm supply? (d) Does the firm continue to supply this quantity in the short-run? (e) Suppose there exists a standard market demand function from consumers (downward slopping). Please provide a logical discussion about how the market achieves short-run equilibrium.Q24 Consider a perfectly competitive firm in the following position: output = 4000, market price = $1, total fixed costs = $2000, total variable costs = $4500, and marginal cost = $1. To maximise profits, the firm should... a. Produce zero output. b. Increase the market price. c. Not change its output. d. None of the other options are correct. e. Expand its output.true/false 1- if a perfectly competitive firm shuts down in the short run, its variable cost equals zero. 2- if a perfectly competitive firm shuts dowm in the short run, its total cost equals zero.