Alpha, a company is selling in a perfectly competitive market. Its output is 100 units which sells for $4 each. At this level of output, total cost is $500, total fixed cost is $110, and marginal cost is constant at $4. In the short run, the firm should Group of answer choices reduce output to about 40 units reduce output to about 80 units continue to produce 100 units produce zero units of output There is not enough information to tel

Alpha, a company is selling in a perfectly competitive market. Its output is 100 units which sells for $4 each. At this level of output, total cost is $500, total fixed cost is $110, and marginal cost is constant at $4. In the short run, the firm should Group of answer choices reduce output to about 40 units reduce output to about 80 units continue to produce 100 units produce zero units of output There is not enough information to tel

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

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Don't use chatgpt or any AI A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
Use the following table and use your previous calculations: find the quantity where ATC is at a minimum and find the quantity that is the most efficient operating point for the firm. Total Output Total Cost TFC TVC AFC AVC ATC MC 0 $20 10 $40 20 $60 30 $90 40 $120 50 $180 60 $280 a. MC = ATC between 30 and 40 Quantity ATC at minimum between 20 and 40 Quantity b. MC = ATC at 30 Quantity ATC at minimum between 20 and 40 Quantity c. MC = ATC at 40 Quantity ATC at minimum between 20 and 40 Quantity d. MC = ATC between 30 and 40 Quantity ATC at minimum between30 and 40 Quantity e. MC = ATC between 20 and 40 Quantity ATC at minimum between 20 and 40 Quantity
Kasey Puzzle, Inc. sells geography-based puzzles. Kasey currently sells 25,000 units a month for $40 each, has variable costs of $20 per unit, and fixed costs of $300,000. Kasey Puzzle is considering increasing the price of its units to $60 per unit. This will not affect costs, but demand is expected to drop 20%. Should Kasey Puzzle increase the price of its product? с Multiple Choice O O Yes, profit will increase $500,000. No, profit will decrease $500,000. No, profit will decrease $300,000. Yes; profit will increase $300,000.
80 60 70 10 MC1 00 60 50 Price and cost (dollars) 40 40 30 20 20 10 0 MC2 Demand 50 100 150 Quantity The demand for dishwashers facing the AllClean Co. is given in the figure above. The firm manufactures dishwashers in two plants. MC1 and MC2 are the marginal cost curves for those two plants. How should the firm allocate total output between the two plants in order to maximize profit? Multiple Choice • 10 to plant 1, 40 to plant 2 . 20 to plant 1, 30 to plant 2 . 40 to plant 1, 40 to plant 2 . 20 to plant 1, 60 to plant 2 20 to plant 1, 50 to plant 2 (Ctrl)
a donut shop charges customers the same price. the profit maximising output is 100 at a price of 5$ per donut. marginal cost is 2$. The donut shop owner now discovers that it has two very different types of customer children and adults . It can maximise its profits by selling 30 donuts to children for a price of 4$ per donut and 70 donuts per evening to everyone else for a price of 6$ per donut. Draw a diagram showing the profit-maximising price and output a) when all customers are charged the same price and b) when children are charged a different price c)How much profit does the donut shop owner make when children are charged a different price? explain how to draw the diagrams also in detail please!
Cost LRAC 40 30 20 10 100 200 400 800 Output b. What happened to the cost of one good as the firm increased its output from 100 units to 200 units and from 200 units to 400 units? c. What is the firm experiencing as it increased it scale of operation from 100 units to 400 units? d. What is the firm experiencing if it chooses to produce at point P? Give reason for your answer. e. Which point would be the best point for the firm to produce at? Give reason for your answer.
PRODUCTION| 2 8 10 12 14 LEVEL MARKET 3 3 3 3 PRICE ТОTAL INCOME TOTAL FIXED 14 14 14 14 14 14 14 COST ТОTAL 4.5 5.5 6.7 8.2 10 13.25 VARIABLE 25 COST TOTAL COST TОTAL BENEFIT MARGINAL 3 3 3 3 INCOME AVERAGE TOTAL COST Develop the following numerical example of perfect competition, which should add the procedure for calculating the missing costs, income, and profit. Considering the following data: a) Indicate at what level of production the MC is equal to the price, so that the company is perfectly competitive in the short term. 3. 3.
Assume the firm can sell its product for $14 each. TR AVC TC АТС MC $2000 100 $1400 $600 $2600 $26.00 $6.00 200 $2800 $5.00 $3000 $15.00 300 $1920 $6.40 $3920 $9.20 400 $5600 3280 $8.20 $13.20 $13.60 Suppose the manager decided to sell at an output that maximized average profit. At a market price of $14, how many would he sell? would you do about this manager, and why? As the owner of this company, what
Peter runs a small local newspaper company. He can sell a newspaper at $2. He has fixed costs of $10,000. His variable costs are $1,500 for the first thousand newspapers, $1000 for the second thousand, and then $600 for each additional thousand newspaper.Can he make profit at current market price? What is the breakeven price in this business (assuming maximum production at 10,000 newspaper)?
he table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that roduces children's mittens in a competitive market. Smitten's Production Costs Quantity (pairs of mittens) Marginal Cost (dollars) $1.60 Average Total Cost (dollars) $2.2 2.17 2.21 25 30 2.00 35 2.45 3.55 4.00 40 2.38 45 2.56 2.85 50 5.50 55 6.00 3.14 60 8.50 3.58 Instructions: In part a, enter your answer as a whole number. In parts b, c. and d, round your answers to two decimal places. a. If the market price of children's mittens is $6.00 per pair, how many palrs of children's mittens should Smitten produce per week to maximize its profits? pairs of mittens b. When the market price is $6.00, what is Smitten's average total cost at the profit-maximizing quantity of children's mittens? %24 3.28 c. What are Smitten's weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens? d. What are Smitten's weekly…
Help Save & Exit Submit The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children's mittens in a competitive market. Smitten's Production Costs Quantity (pairs of mittens) 15 Marginal Cost (dollars) $1.60 Average Total Cost (dollars) $1 20 2.00 1.25 25 2.45 1.49 30 3.55 4.00 1.83 35 2.14 40 5.50 6.00 8.50 2.56 45 2.94 50 3.5 Instructions: In part a, enter your answer as a whole number. In parts b, c and d, round your answers to 2 decimal places. a. If the market price of children's mittens is $6.00 per pair, how many pairs of children's mittens should Smitten produce per week to maximize its profits? pairs of mittens b. When the market price is $6.00, what is Smitten's average total cost at the profit-maximizing quantity of children's mittens? 24 c. What are Smitten's weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens? p..........: d.…
Gater Tools, a profit-maximizing firm, has a patent on a power tool, making it the only producer of that power tool. Thegraph above shows GaterTools' demand, marginal revenue, average total cost, average variable cost, and marginal costcurves.(a) Calculate GaterTools' total revenue if the firm produces the allocatively efficient quantity. Show your work.(b) Starting at a price of $12, if GaterTools were to increase the price by 4%, will the quantity demanded decrease bymore than 4%, less than 4%, or exactly 4%? Explain.(c) At a quantity of 10 units, is GaterTools' marginal product increasing, decreasing, or constant? Explain. (f) Does GaterTools have a dominant strategy? Explain using numbers from the payoff matrix.(g) Identify the Nash equilibrium. Explain why this is a Nash equilibrium using information from the payoff matrix.(h) Suppose HandyBilt makes a credible commitment to GaterTools that if GaterTools maintains its price, then HandyBiltwill pay GaterTools $250. Will this offer…