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- 6. A firm's demand function for a certain good is given by P= 100e"1e. Its total cost function is rC=100e 10 + 50. What output level maximizes the firm's profit?3. Suppose that a farm manager seeks to maximize its total profit function as given by the equation, profit=80x-2x^2-xy-3y^2+100y. let x-cabbages and y= onions. but the manager faces a constrain that the sum of the cabbages and onions must be equal to 12. a. Calculate the level of output at which the farm maximizes profit b. Calculate the farms profit. c. Comment on the farms performance.The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs MC ($) Quantity of Ear Buds 5 10 15 20 25 30 35 40 2.00 2.45 3.55 4.00 5.50 5.98 8.52 pairs ATC ($) 2.00 2.00 2.15 2.50 2.80 3.25 3.64 4.25 Check my work Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? b. At the profit-maximizing quantity, what is the total cost of producing ear buds? c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? d. Now assume the market price is $5.50 per pair, and Buddies produces the…
- Suppose a firm is operating in a competitive market and is maximizing profit by producing at thepoint where marginal revenue 5 marginal cost.Now suppose that consumer wealth decreasesin this market (and the good is a normal good).What might you expect to happen to the profitmaximizing output quantity for the firm?The graph below depicts the cost structure for a firm in a competitive market. Use the graph to answer the following questions. Figure 14-2 Price PPPP Q₁Q₂ MC AVC ATC Quantity Refer to Figure 14-2. When price rises from P ₂ to P 3, the firm finds that All of the above are correct. marginal cost exceeds marginal revenue at a production level of Q₂. it earns normal or zero profit. O if it produces at output level Q3 it will earn a positive profit.Suppose you are the manager of a watchmaking firm operating in a competitive market. Your cost of production is given by C=200 + 2q?, where q is the level of output and Cis total cost. (The marginal cost of production is 4q; the fixed cost is $200.) 3. a. If the price of watches is $100, how many watches should you produce to maximize profit? b. What will the profit level be? C. At what minimum price will the firm produce a positive output?
- Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below. a.What is the level of profit for this firm at the profit maximizing output? b.To convince yourself that the quantity you found is indeed the profit maximizing quantity, try calculating what the profit would be at the next higher level of output. What did you find? c. What do you predict will happen in this market over the long run?The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 10 3.5 15 3 20 2.44 2.86 25 3.56 3 30 4.02 3.17 35 5.48 3.5 40 5.98 3.81 45 8.49 4.33 Instructions: In part a, enter your answer as the closest given whole imber. a. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce? pairs Instructions: In parts b-d, round your answers to 2 decimal places. b. At the profit-maximizing quantity, what is the total cost of producing ear buds? $ c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit? 2$The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 20 1.00 25 2.00 1.20 30 2.46 1.41 35 3.51 1.71 40 4.11 2.01 45 5.43 2.39 50 5.99 2.75 55 8.47 3.27
- 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)The following figure shows the marginal cost curve, average total cost curve, average variable cost curve, and marginal revenue curve for a firm for different levels of output. Price R W S 0 A F H B G MC K ATC AVC MR Quantity Assuming that price at OR is $10, the profit maximizing level of output for the firm is 1. OA where marginal cost just covers AVC 2. OB where average profit per unit is the greatest 3. OC where marginal cost equals the $10 price 4. OK where average cost equals marginal revenue and the firm earns a normal rate of returnUse the figure to select all the correct statements. $ A B Q1 Q2 Q3 Q4 Q5 Q6 OA. The distance between Curve A and Curve B shows the average profit of the firm at any given quantity of output. B. Curve A shows the total cost function of the firm. OC. The slope of the tangent line for Curve B when the quantity is Q2 is the marginal profit of the firm when output is Q2. OD. Curve B shows the total cost function of the firm. O E. The distance between Curve B and X-axis is the firm's total revenue at any given quantity of output.
