At the profit-maximizing output level, the slopes of the revenue and total cost curves are not equal, that is; MR(y*) < MC(y*). Select one: True False
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- Suppose the situation changes. JointJuice has its plant in Portland Oregon. The local government passes a new tax on businesses that raises JointJuice’s fixed cost by $25 per period. The cost function now becomes: C(q) = 300 + 6q + 0.1q^2 All the other firms in the market are in other states/cities that are not subject to the laws or taxes of Portland. Calculate JointJuice’s optimal output level and profits if the market price for the product stays the same as for part a. What will the firm do in the long run? Is it reasonable to assume the market price prevailing today will remain the same in the long run? If so why? If not, why not? How about the number of firms in the market?When economists talk about a barrier to entry, they are referring to a.the downward-sloping portion of the long-run average total cost curve. b.a factor that makes it difficult for potential competitors to enter a market. c.the opportunity cost of equity capital that is incurred by a firm producing at minimum total cost. d.the declining output experienced as additional units of a variable input are used with a given amount of a fixed input.A two - product firm faces the following demand and cost functions: Q1 = 40 - 2P1 - P2 Q2 = 35 - P1 - P2 C = Q 2/1 + 2Q 2/2 + 10 (a) find the output levels that satisfy the first order condition for maximum profit. (use fractions) (b) check the second - order sufficient condition. Can you conclude that this problem possesses a unique absolute maximum? (c) What is the maximal profit?
- The cost function for a firm is given by C(Q) = 5+q^2. If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $20, what price should the manager of this firm put on the product? What level of output should be produced to maximize profits? How much profit will be earned?The total revenue curve of a firm is R(q) = 40q − 12q2 and its average cost A(q) =1/30q2 − 12.85q + 20 +400/q, where q is the firms output. Is the rate of change of profit increasing or decreasing when the ouput level of the firm is 10 units? Determine the level of output for which the firms profit is maximized. What is the firm's maximum profit?The total cost of a firm is TC(Q)=4Q2+6Q+34. Accordingly, its marginal cost is 2*4*Q+6 when its output is Q. Find the output level where the ATC is minimized.
- The market for drones is perfectly competitive. Assume for simplicity that fractions of everything, including firms, is possible. We have identical firms, each with a Total Cost curve of TC=376+91q+q^2 and Marginal Cost curve MC=[b]+2q. Market demand is Q=695-2P. What is the Average Total Cost if the firm produces 37 units?Consider a manufacturing firm with total cost function: TC = 250,000 + 40Q + 0.01Q2, and market demand function: P = 940 – 0.02Q (a) Determine the firm’s profit function. (b) Determine the firm’s OPTIMAL output level. (c) Find the market price of the output at optimal operation?Suppose a farmer is a price taker for soybean sales with cost functions given by the following: TC=0.1q2 +2q+30 MC = 0.2q + 21. Refer to Scenario 9-3. If P = 6, the profit-maximizing level of output is (a) 10. (b) 20. (c) 40. (d) 80. 2. Refer to Scenario 9-3. If P = 10, the profit-maximizing level of output is (a) 0. (b) 30. (c) 40. (d) 50.
- A store can sell 12 telephone answering machines per day at a price of $200 each.. The manager estimate that for each $10 price reduction she can sell 2 more per day. The answering machines cost the store $80 each. Find the price and the quantity sold per day to maximize the companys profit. Let x be the number of $10 dollar price reductions. Find in this order the following functions: n(X)= number of items sold the price function p(x) the cost function C(x) the revenue function R(x) and the profit function P(x) Then maximize the profit function.Suppose the cost function for a firm is given by C(Q) = 100 + Q2. If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $10, what level of output should the firm produce to maximize profits or minimize losses? What will be the level of profits or losses if the firm makes the optimal decision?The market price a perfectly competitive firm has to take is pm and the total cost to the firm is TC(Q)=aq+Bq2 +y , where y is fixed cost of the firm . Find the optimal output to the firm in terms of market price pm. Express also maximum profit. How does maximum profit depend on the market price and the level of fixed cost? All parameters are assumed to be positive.?
