9. Problems and Applications Q10 An industry currently has 100 firms, each of which has fixed costs of $15 and average variable costs as follows: Complete the following table by deriving the total cost, marginal cost, and average total cost for each quantity from 1 to 6. Average Variable Cost Quantity (Dollars) Average Total Cost (Dollars) 1 2 10 12 The equilibrium price is Jurrently $20. Each firm produces Total Cost Marginal Cost (Dollars) (Dollars) 15 units, so the total quantity supplied in the market is units. In the long run, firms can enter and exit the market, and all entrants have the same costs as in the previous table. As this market makes the transition to its long-run equilibrium, the price will firm will quantity demanded will and the quantity supplied by each.

9. Problems and Applications Q10 An industry currently has 100 firms, each of which has fixed costs of $15 and average variable costs as follows: Complete the following table by deriving the total cost, marginal cost, and average total cost for each quantity from 1 to 6. Average Variable Cost Quantity (Dollars) Average Total Cost (Dollars) 1 2 10 12 The equilibrium price is Jurrently $20. Each firm produces Total Cost Marginal Cost (Dollars) (Dollars) 15 units, so the total quantity supplied in the market is units. In the long run, firms can enter and exit the market, and all entrants have the same costs as in the previous table. As this market makes the transition to its long-run equilibrium, the price will firm will quantity demanded will and the quantity supplied by each.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 41P: A computer company produces affordable, easy-to-use home computer systems and has fixed costs of...

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A computer company produces affordable, easy-to-use home computer systems and has fixed costs of 250. The marginal cost of producing computers is 700 for the first computer, 250 for the second, 300 for the third, 350 for the fourth, 430 for the fifth, 450 for the sixth, and 500 for the seventh. Create a table that shows the companys output, total cost, marginal cost, average cost, variable cost, and average variable cost. At what price is the zero-profit point? At what price is the shutdown point? If the company sells the computers for 500, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss. If the firm sells the computers for 300, is it making a profit or a loss? How big is the profit or loss? Sketch a graph with AC, MC, and AVG curves to illustrate your answer and show the profit or loss.
QUESTION 17 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
1. A firm has three different production facilities, all of which produce the same product. Whilereviewing the firm’s cost data, Ron, a manager, discovered that one of the plants has a higher averagecost than the other plans and suggests closing this plant. Another manager, Jack, notes that the high-cost plant has high fixed costs but that the marginal cost in this plant is lower than in the other plants.He says that the high-cost plant should not be shut down but should expand its operations. Who isright? 2. Should a firm shut down if its weekly revenue is $1,000, its variable cost is $500, and its fixed cost is$800, of which $600 is avoidable if it shuts down? Explain.
Assume that the cost data in the following table are for a purely competitive producer: TotalProduct AverageFixed Cost AverageVariable Cost AverageTotal Cost Marginal Cost 0 1 $60.00 $45.00 $105.00 $45.00 2 30.00 42.50 72.50 40.00 3 20.00 40.00 60.00 35.00 4 15.00 37.50 52.50 30.00 5 12.00 37.00 49.00 35.00 6 10.00 37.50 47.50 40.00 7 8.57 38.57 47.14 45.00 8 7.50 40.63 48.13 55.00 9 6.67 43.33 50.00 65.00 10 6.00 46.50 52.50 75.00 Instructions: If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. Select "Not applicable" and enter a value of "0" for output if the firm does not produce. a. At a product price of $56.00 (i) Will this firm produce in the short run? (Click to select) No Yes (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? (Click to select) Not applicable Loss-minimizing…
Problem 2: Average total cost, from “Principles of Economics” by N. Gregory MankiwYou are the chief financial officer for a firm that sells gaming consoles. Your firm has thefollowing average-total-cost schedule:Quantity | Average total cost600 $300601 $301Your current level of production is 600 consoles, all of which have been sold. Someone calls, desperateto buy one of your consoles. The caller offers you $550 for it. Should you accept the offer? Why or whynot?
Assume that the cost data in the following table are for a purely competitive producer: TotalProduct AverageFixed Cost AverageVariable Cost AverageTotal Cost Marginal Cost 0 1 $ 60.00 $ 45.00 $ 105.00 $ 45.00 2 30.00 42.50 72.50 40.00 3 20.00 40.00 60.00 35.00 4 15.00 37.50 52.50 30.00 5 12.00 37.00 49.00 35.00 6 10.00 37.50 47.50 40.00 7 8.57 38.57 47.14 45.00 8 7.50 40.63 48.13 55.00 9 6.67 43.33 50.00 65.00 10 6.00 46.50 52.50 75.00 a. At a product price of $56.00 (i) Will this firm produce in the short run? yes (ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? profit- maximizing output = 9 units per firm (iii) What economic profit or loss will the firm realize per unit of output? Profit per unit = $ 16 b. At a product price of $41.00 (i) Will this firm produce in the short run? Yes (ii) If it is preferable to produce, what will be the…
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
15. The table below shows cost data for producing different amounts of refrigerators. Use the given information to answer the questions below. Quantity Total Cost Variable Cost Marginal Cost Average Variable Cost Average Total Cost in $ in $ in $ in $ in $ 241 0 271 30 361 120 491 250 681 440 901 660 0 10 What is the profit (loss) at that level of production? 20 30 40 50 How many refrigerators would a competitive firm produce if the market price was $19? 3 9 13 19 22 3.00 6.00 8.33 11.00 13.20 27.10 18.05 16.37 17.02 18.02
100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars)
10. Problems and Applications Q10 An industry currently has 100 firms, each of which has fixed costs of $16 and average variable costs as follows: Complete the following table by deriving the total cost, marginal cost, and average total cost for each quantity from 1 to 6. Quantity Average Variable Cost Total Cost Marginal Cost Average Total Cost (Dollars) (Dollars) (Dollars) (Dollars) 0 16 1 1 2 2 3 3 4 4 5 5 6 6 The equilibrium price is currently $10. Each firm produces __________ units, so the total quantity supplied in the market is _________ units. In the long run, firms can enter and exit the market, and all entrants have the same costs as in the previous table. As this market makes the transition to its long-run equilibrium, the price will _______ , quantity demanded will ________ , and the quantity supplied by…
Microeconomics Q193515 Deadline passed If the price (P) of maple syrup is $4.00 per can, average cost (AC) is $4.50 per can and average variable cost (AVC) is $3.00 per can, then to maximize profit or minimize loss the firm should: Answer approved2$1 Will be moved to archive within about 9 hours. Microeconomics Q194159 4 hours 26 min 1. Briefly discuss two major differences between the theory of perfect competition and the theory of monopoly. 2. What reasons make the demand curve of a perfectly competitive firm completely horizontal? Only state. 3. Represent the information below in an appropriately labelled diagram with the relevant curves, and decide whether the firm should continue production or shut down in the short run, using calculations. A perfectly competitive firm produces 100 mugs to maximize its profit. The average total cost (ATC) is 13 taka per mug and the average fixed cost (AFC) is 4 taka per mug when the firm produces 100 mugs. The…
Suppose Felix runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Felix's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Felix produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 0 1 ● ^ 2 O ☐ A ☐ A 3 4 5 QUANTITY (Frying pans) O ☐ 6 Total Cost ☐ 7 8 o Total Revenue Profit ? image 1 Calculate Felix's marginal revenue and marginal cost for the first seven frying pans 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 at each quantity.