A profit-maximizing firm in the short run will expand output Multiple Choice until marginal cost begins to rise. until total revenue equals total cost. as long as marginal revenue is less than marginal cost. as long as marginal revenue is greater than marginal cost.
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A profit-maximizing firm in the short run will expand output
-
until marginal cost begins to rise.
-
until total revenue equals total cost.
-
as long as marginal revenue is less than marginal cost.
-
as long as marginal revenue is greater than marginal cost.
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- A profit-maximising firm in a competitive market is currently producing 1,000 units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000. a) What is its profit? b) What is its marginal cost? c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?When the price of a kettle increases from OMR 15 to OMR 20, the quantity demanded drops from 3550 units to 2500 units. Calculate the elasticity of demand and comment on the degree of elasticity. A hotel that produces 300 pizzas has a variable cost of OMR 100 and a fixed cost of OMR 150. Calculate the total cost, average total cost, average variable cost, and average fixed cost of the bakery.Ben opened his ice cream stand and he aims to maximize profits by making 100 ice cream cones a day. Ben planned to buy two ice cream makers, but his sister happened to have an extra one and she gave it to him for free. Ben's fixed costs decrease and the market price remains constant. The short run profit maximizing level of output a day a) becomes zero b) is still 100 ice cream cones c) is more than 100 ice cream cones d) is less than 100 ice cream cones
- A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of Rs.1000, average total cost of Rs.800, and fixed cost of Rs.20,000. a) What is its profit? b)What is its marginal cost? c) Is the efficient scale of the firm more than, less than, or exactly 100 units?Determine a firm’s profit-maximizing decision in the short run.The figure depicts the demand curve of a firm producing cars, together with its marginal cost, average cost, and isoprofit curves. Based on this figure, which of the following statements are correct? 8,000 Price, Marginal cost ($) 0 E Quantity of cars, Q At A, the firm makes positive profits. The firm makes the same profit at B and D. O Profit margin is the same at B and D. O The slope of the isoprofit is zero at D. MC Isoprofit A Isoprofit B AC 100
- Good Grapes is selling grapes in a purely competitive market. Its output is 5,000 pounds, which it sells for $5 a pound. At the 5,000-pound level of output, the average variable cost is $4.00, the marginal cost is $4.25, and the average total cost is $4.50 a pound. Should the firm increase output, decrease output, or not produce? Why? How should the firm determine the optimal level of output?The diagram shows a price-taking bakery's marginal and average cost curves, and its isoprofit curves. The current market price for bread is P*= 2.50. Which of the following statements is correct? 8 Price, P (€); cost 4 3.70 2.50 2 0 0 Select one: 20 40 60 80 100 120 140 Quantity of loaves, Q 160 180 O a. The bakery is a price setter and sets its price as 2.50. b. The bakery maximises its profits by supplying 160 loaves. O c. The bakery's profit is 200. Marginal cost curve Isoprofit curve: €200 Isoprofit curve: €80 Firm's demand curve Zero-economic- profit curve (AC curve) 200 O d. The bakery's profit decreases until the quantity is 120, and then increases. e. The marginal cost curve is the bakery's supply curve.Draw the cost curves for a typical firm. For a given price, explain how the firm chooses the level of output that maximizes profit. At that level of output, show on your graph the total revenue of the firm. Show its total costs.
- Suppose that over the short run (say the next 5 years), demand for OPEC oil is given by P = 165 – 2.5q. Here q is measured in millions of barrels a day. OPEC marginal cost per barrel is $15. What is OPEC’s optimal level of production? What is the prevailing price of oil at that level? Many experts contend that maximizing short-run profit is counterproductive for OPEC in the long run because high price reduces buyers to conserve energy and spur competition and new exploration that increases the overall supply of oil. Suppose that the demand curve just described will remain unchanged only if oil prices stabilize at $65 per barrel or below. If oil price exceeds this threshold, long run demand (over a second five year-period) will be curtailed to P = 135 – 2.5q. OPEC seeks to maximize its total profit over the next decade. What is the optimum output and price policy? (assume all values are present values)Answer the question on the basis of the following demand and cost data for a specific firm. (1) Price $ 12.00 11.00 10.00 9.00 8.00 7.00 6.00 Demand Data (2) Price (3) Quantity $ 10.00 6 8.85 7 8.00 8 7.00 6.10 5.00 4.15 Multiple Choice decline to zero. fall to $8. fall by $11.50 9 10 11 12 Increase by $15. Suppose that entry into the industry changes this firm's demand schedule from columns (1) and (3) to columns (2) and (3). Economic profit will Output 6 7 8 9 Cost Data 10 11 12 Total Cost $ 61 62 64 67 72 79 86A profit-maximising firm in a competitive market is currently producing 1,000units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000.a) What is its profit?b) What is its marginal cost?c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
