8. Ina sells her homegrown eggplant at a roadside stand. Assume that the industry is perfectly competitive. Draw average total cost, average variable cost and marginal cost curves. Draw the marginal revenue curve (MR) such that the price is equal to the shut-down price. Label this MR Then indicate the profit-maximizing output (Q). Label this Q

8. Ina sells her homegrown eggplant at a roadside stand. Assume that the industry is perfectly competitive. Draw average total cost, average variable cost and marginal cost curves. Draw the marginal revenue curve (MR) such that the price is equal to the shut-down price. Label this MR Then indicate the profit-maximizing output (Q). Label this Q

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 39P: The AAA Aquarium Co. sells aquariums for 20 each. Fixed costs of production are 20. The total...

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What two lines on a cost curve diagram intersect at the shutdown point?
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A pastries company has fixed costs of $250. The marginal cost of producing computers is $700 for the first computer, $250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the sixth, and $500 for the seventh. First. Create a table that shows the company's output, total cost, marginal cost, average cost,variable cost, and average variable cost. Second. At what price is the zero-profit point? At what price is the shutdown point? Third. If the company sells the computers for $500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss. Fourth. If the firm sells the computers for $300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVC curves to illustrate your answer and show the profit or loss.
Question Calculate MC, AVC, and total fixed costs for the data below: Output Total Cost 0 20 1 25 2 30 3 35 4 40 5 45 6 50 7 55 8 60 Sketch the MC and the AVCcurves. Given that each output is sold at $8.5, calculate Average Revenue, Marginal Revenue, and profit
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Exercise-Universal Shampoo is a price taker firm. Its costs are: Output (Shampoo per hour) Total Cost ($ per hour) 0 10 1 21 2 30 3 41 4 54 5 69 a. Calculate Universal’s profit-maximizing output and economic profit if the market price is (i) $14 a shampoo. (ii) $12 a shampoo (iii) $10 a shampoo b. What is Universal’s shutdown point and its economic profit if it shuts down temporarily? c. At what price will firms with costs identical to Universal’s exit the Shampoo market in the long run? id. At what price will firms with costs identical to Universal’s enter the Shampoo market in the long run?
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