Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 23, Problem 5E
To determine
Accounting profit and economic profit is to be determined.
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What would change if you found a new niche market to sell your product and your sales jumped to $200,000 and your input costs went up to $30,000? What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market? please show work!
Macmillan Learning
Quantity (units)
Fixed cost ($)
Variable cost ($)
Total revenue ($)
10
100
11
100
12
888
36
1,000
74
1,100
100
145
1,200
13
100
14
100
15
100
16
100
17
100
88888
202
1,300
300
1,400
435
1,500
588
1,600
774
1,700
a. What is the marginal revenue received from the 11th unit?
b. What is the marginal cost of producing the 11th unit?
$
c. What price does this firm charge for each hard drive?
d. How many units should this firm produce to
maximize profits?
e. When profit maximizing, what is this firm's profit?
$
per unit
units
Fixed
Costs
$5,000
0
Quantity of output
Refer to the figure above, what happens to the average fixed cost of production
when the firm decreases output from 200 to 150?
150
200
Total
Fixed
Cost
It falls.
It could rise or fall depending on what happens to total revenue.
It remains constant.
It rises.
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- You own a business and make $100,000/year. You pay yourself $50,000 and have input costs of $20,000. You could rent the land for $5,000. Starting salary at a competing firm is $100,000. What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market? What would change if you found a new niche market to sell your product and your sales jumped to $200,000 and your input costs went up to $30,000? What is your accounting profit? Economic profit? Should you stay in business? Would other firms enter into the market?arrow_forwardThe table below shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. $0 (it breaks even) loss of $1,000 Quantity profit of $440 loss of $440 100 200 300 400 500 600 Total Cost (dollars) $1,000 1,360 1,560 1,960 2,760 4,000 5,800 Variable Cost (dollars) $0 360 If the market price of each camera case is $8 and the firm maximizes profit, what is the amount of the firm's profit or loss? 560 960 1,760 3,000 4,800arrow_forwardQuantity Price ($) Total Revenue ($) Marginal Revenue ($) Total Cost ($) Marginal Cost ($) Average Cost($) 2 24 48 23 35 2.5 17.5 4 23 92 21 45 5 11.25 6 22 132 19 60 7.5 10 8 21 168 17 77 8.5 9.63 10 20 200 15 100 11.5 10 12 19 228 13 126 13 10.5 14 18 252 11 165 19.5 11.79 16 17 272 9 210 22.5 13.13 18 16 288 7 260 25 14.44 20 15 300 5 320 30 16 The table above is for a monopolistic competitive firm. What will the firm's profit equal in the short run? Question 20 options: $0 $91 $102 $228arrow_forward
- Quantity Price ($) Total Revenue ($) Marginal Revenue ($) Total Cost ($) Marginal Cost ($) Average Cost($) 2 24 48 23 35 2.5 17.5 4 23 92 21 45 5 11.25 6 22 132 19 60 7.5 10 8 21 168 17 77 8.5 9.63 10 20 200 15 100 11.5 10 12 19 228 13 126 13 10.5 14 18 252 11 165 19.5 11.79 16 17 272 9 210 22.5 13.13 18 16 288 7 260 25 14.44 20 15 300 5 320 30 16 The table above is for a monopolistic competitive firm. What price will the firm charge? Question 19 options: $13 $15 $19 $24arrow_forwardQuantity Price ($) Total Revenue ($) Marginal Revenue ($) Total Cost ($) Marginal Cost ($) Average Cost($) 2 24 48 23 35 2.5 17.5 4 23 92 21 45 5 11.25 6 22 132 19 60 7.5 10 8 21 168 17 77 8.5 9.63 10 20 200 15 100 11.5 10 12 19 228 13 126 13 10.5 14 18 252 11 165 19.5 11.79 16 17 272 9 210 22.5 13.13 18 16 288 7 260 25 14.44 20 15 300 5 320 30 16 The table above is for a monopolistic competitive firm in the short run. What will the firm's profit equal in the long run? Question 21 options: $0 $91 $102 $228arrow_forwardOutput (unit) Total Cost (RM) Price (RM) 1 550 660 2 670 585 3 720 510 4 740 435 800 360 960 285 1190 210 135 60 8 1520 2160 Table 3 Table 3 shows data for a firm's production and costs in the long run. a. Based on Table 3, compute the marginal cost, average cost, marginal revenue, and average revenue as the output increases from 0 to 9 units. C. Based on your calculation from question (a), show the quantity and price where the equilibrium condition is found.arrow_forward
- What is the relationship between revenue cost and profit?arrow_forward(A) Comment on marginal revenue and marginal cost values when it is given that marginal profit is 0. (B) Also comment on total profit value of the firm.arrow_forwardMorgan took $400 000 out of their savings account to start an ice cream stand. The savings account paid 5% interest. In the first year, Morgan sold 12,000 batches of ice cream at a price of $3 each, and incurred costs of $12,000 which involved outlays of money. What was Morgan’s economic profit in the first year?arrow_forward
- Tammy quit her job as a math teacher making $70,000 per year to start her own online business. The first-year revenue totaled to $200,000. During the first year of online business, Tammy paid $50,000 for the office rent and $20,000 for utilities and supplies. What is the amount of accounting profit generated from Tammy’s online business? $60,000 $200,000 $130,000 $70,000arrow_forwardQUESTION 9 John lives in the small island nation of Vanuatu, and is a producer in the perfectly competitive market for galip nuts. A summary of some of his costs, which are given in the local currency (the "vatu"), is shown below. Quantity (kg of galip nuts) 0 30 60 90 120 150 Total Fixed Cost TFC (vatu) 5600 5600 5600 5600 5600 5600 Total Variable Cost TVC (vatu) 0 640 1520 2640 4800 9120 If John's profit-maximising quantity is 90kg of galip nuts, what is the marginal revenue per kilogram of galip nuts at this profit maximising quantity? Answer to the nearest whole number.arrow_forwardWhich of the following is not a part of the short run marginal costs for a pharmaceutical company? a. Marketing costs b. Large manufacturing equipment costs c. The cost of administrative activities d. Production and manufacturing costsarrow_forward
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