18. Assume price is $10.The profit maximizing level of output for the firm is: GA where margināl-cost just covers AVC. - b. OB where average profit per unit is the greatest. OC where marginal cost equals the $10 price. d: -OK where average cost equals avenge revenue and the firm earns' a normal rate а. TR-F of return.
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- Price and cost $4.00 3.20 2.40 1.60 0 Questraq; not sugamon Isnigiem sunsven lang jam neris MC ITAALS 25006 DMC Sorberg in ATC AVC HONDE SOM= 15152 850 1,700 MR 2,550 D Quantity a. If Elijah produces at the profit-maximizing level of output, how much is his total revenue? How much is his total cost? Briefly explain your calculations. a. How much economic profit is Elijah earning? Briefly explain your calculation.Refer to the short-run graph data below. The profit-maximizing output for this firm is: A. above 440 units. B. 440 units. C. 320 units. D. 100 units. $1,400 1,200 1,000- 800 600 400 200 0 100 Total Cost 320 440 Output Total RevenuePoints are listed in the brackets in each part Assume the short-run cost table above represents the cost for a firm in a purely competitive industry. Total product is the Q of production. Total product TFC TVC TC AFC AVC АТС MC 1 40 95 2 75 15 4 150 135 6 170 a. Complete the table above b. Applying the rule of profit maximization, if the product market price of $35, will this firm produce, why or why not c. At price $35, how much should this firm produce? d. How much will the profit/loss./break-even? e. How much is the marginal revenue? f. Show the situation graphically with MR, Demand, ATC, AVC, and MC graphs. Label the equilibrium Q and Price points
- OutputAFC AVC АТС MC 1 100 40 140 40 50 35 85 30 3 33.33 35 68.33 35 4 25 36.25 61.25 40 5 20 38 58 45 16.67 40 56.67 50 A price taking firm has the above cost data. The price of output is $34. What level of output should the firm choose to maximize profit in the short run?15. Assuming this firm maximizes profit, it will: a. Produce QA regardless of pricet b. Produee 0A onlý at price of P CMake.azero profit at price P2 (output 0C d. Make a profit of KL times OD at price P1Figure 16-12 100 Price 90 80 MC ATC 70 58 60 50 40 36 30 + 20 10 + MR 4 8 12 16 20,24 28 32 Buaxtity c) Does the firm minimize cost? Why or why not? How much excess capacity does this firm have?
- Under which of the folowing examples is t likaly that the accounting profit is positive and the economic profit is negative? OA Using a restaurant you purchased to sell Menican food instead of talian food. OR It you use a diamond mine as a touriet atraction instead of using it for mining. Oc Opering a bank branch near a university campus. OD. Such a scenario, where accounting cost is positive and economic profit is negafive, is not possibie.£4 £3 Stuc 3. The figure below shows short run cost and revenue curves fac firm. Price and cost per unit MC £5 ATC AVC Demand £1 16 32 48 64 Quantity (000s) Refer to the figure above, what is the quantity of output that firm will produce? a. 16 000. b. 32 000. c. 48 000. d. 64 000. MR18. New firms will exit aheriesty.competinve mzrket when: 1 average variable costs are less han average total costs b. price is greate: than average variable costs e maginal revenue is greater than average total costs in the short run O price is less than average total cests in the long rua
- Isit possible for accounting profit to be positive and economic profit to be negative? OA Na, economic profit and accounting profit will always end up being the same. OB. No, economic profit must always be larger than accounting profit. OC Yes, this could ocour if axplicit costs were modest and implict costs were high. OD. Yos, this could occur if impiot costs were modest and explict costs were high.What is the law of diminishing returns? Why does marginal product eventuallydiminish?b. Explain the relationship between marginal product and average product. Lin’s makes fortune cookies. Anyone can make and sell fortune cookies, so thereare dozens of producers. All fortune cookies are the same and buyers and sellersknow this fact. In what type of market does Lin’s operate? What determines theprice of fortune cookies? What determines Lin’s marginal revenue?d. What is the shape of the AFC curve and why does it have this shape?A computer company produces affordable, easyto-use home computer systems and has fixed costs of$250. The marginal cost of producing computers is $700for the first computer, $250 for the second, $300 for thethird, $350 for the fourth, $400 for the fifth, $450 for thesixth, and $500 for the seventh.a. Create a table that shows the company’s output,total cost, marginal cost, average cost, variablecost, and average variable cost.b. At what price is the zero-profit point? At whatprice is the shutdown point?c. If the company sells the computers for $500, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.d. If the firm sells the computers for $300, is itmaking a profit or a loss? How big is the profitor loss? Sketch a graph with AC, MC, and AVCcurves to illustrate your answer and show theprofit or loss.