2. A faculty member sells Gatorade at UNC Charlotte football games. He finds that if he raises his selling price by $1, he sells 6 less bottles each week. He turns over the operation to a Managerial Economics student for a week. The goal is to maximize revenue since the faculty member has a vast supply of Gatorade, and any unsold bottles can be sold in future weeks. The student takes over the operation for a week. She says she sold at the revenue-maximizing price of many units sold? Show your work/thought process: per bottle. How

The following graph plots daily cost curves for a firm operating in the competitive market for jumpsuits. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE (Dollars per jumpsult) 50 45 40 35 30 25 20 15 10 5 10 W 0 Y ATC AVC 2 MC 4 8 QUANTITY (Thousands of jumpsuits per day) 6 10 + 14 16 18 12 20 Profit or Loss In the short run, given a market price equal to $15 per jumpsuit, the firm should produce a daily quantity of of On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $15 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. The rectangular area represents a rt-run thousand per day for the firm. jumpsuits.

Consider a price-searching firm, Sam’s Fire Engines, which sells fire engines in the fictional country of Pyrotania. Initially, Sam’s produced seven fire engines but then decided to increase production to eight fire engines. The following graph shows the demand curve the firm faces. To sell the additional engine, Sam’s must lower its price from $100,000 to $50,000 per engine. (Hint: Sam’s Fire Engines gains revenue from the additional engine it sells, but it also loses revenue from the initial seven engines because it sells them all at the lower price.) On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000.

Exercise 2.8 (M&T, chap. 6, p. 157: Exercise 10) Suppose that the graphic arts industry is perfectly competitive and in long-term equilibrium. a) Please provide a graph describing the state of play of a representative firm of the industry. b) The High Quality Printing Corporation (HQPCO) invents a new process that reduces drastically the cost of printing books. How will the profits of HQPCO change and what will be the price of books in the short-term when your patent prevents other companies from using the new technology? c) What happens in the long term when the patent expires and other companies can use the new technology?

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Jane is the general manager at a new café and wants to hire a few baristas. The going rate for baristas in the area is $9.55 per hour. Jane has heard that many of the local coffee shops have high turnover with baristas “ghosting” them—simply not showing up for their shift and never coming back. Jane starts to put together an advertisement to hire baristas for $9.55 per hour, but changes her mind and lists the wage she’ll pay at $11 per hour. Why would Jane pay $9.55 per hour? What’s the rationale for paying $11 (or any wage higher than $9.55)?

Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earned an accounting profit of $200 per acre. Is he currently earning an economic profit?

Suppose Hubert runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Hubert's total cost curve. Use the blue points (circle symbol) to plot total revenue, and the green points (triangle symbol) to plot profit for the first seven shirts that Hubert produces, including zero shirts. TOTAL COST AND REVENUE (Dollars) 125 100 75 50 25 -25 -50 0 0 1 2 ☐ ■ U 3 4 5 QUANTITY (Shirts) L 6 Total Cost 7 8 Total Revenue Profit ? Calculate Hubert's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost.

The term “price taker” can apply to buyers as well as to sellers. A price-taking buyer is a buyer who cannot influence price by changing the amount she buys. What goods do you buy for which you are a price taker? What goods do you buy for which you are not a price taker?

9. Profit maximization in the cost -curve diagram The following graph plots daily cost curves for a firm operating in the competitive market for porch swings.Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. In the short run, given a market price equal to $50 per pressure cooker, the firm should produce a daily quantity of pressure cookers. On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $50 and the quantity of production from your s answer. Note: In the following question, enter a posi profit The rectangular area represents a short - run loss ber regardless of whether the firm earns a profit or incurs a loss. of thousand per day for the firm. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE (Dollars per pressure cooker) 100 8 90 80 70 30 20 10 0 0 5 MC ATC AVC 10 15 20 25…