ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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**Cost Data for a Purely Competitive Producer** The following table presents the cost data for a purely competitive producer: | **Total Product** | **Average Fixed Cost** | **Average Variable Cost** | **Average Total Cost** | **Marginal Cost** | |-------------------|------------------------|---------------------------|------------------------|-------------------| | 0 | | | | $ 45 | | 1 | $60.00 | $45.00 | $105.00 | $ 45 | | 2 | $30.00 | $42.50 | $72.50 | $ 40 | | 3 | $20.00 | $40.00 | $60.00 | $ 35 | | 4 | $15.00 | $37.50 | $52.50 | $ 30 | | 5 | $12.00 | $37.00 | $49.00 | $ 35 | | 6 | $10.00 | $37.50 | $47.50 | $ 40 | | 7 | $ 8.57 | $38.57 | $47.14 | $ 45 | | 8 | $ 7.50 | $40.63 | $48.13 | $ 55 | | 9 | $ 6.67 | $43.33 | $50.00 | $ 65 | | 10 | $ 6.00 | $46.50 | $52.50 | $ 75 | ### Explanation: - **Total Product**: The quantity of output produced. - **Average Fixed Cost (AFC)**: The fixed cost per unit of output. As production increases, AFC declines. - **Average Variable Cost (AVC)**: The variable cost per unit of output. - **Average Total Cost (ATC)**: The sum of AFC and AVC per unit of output. - **Marginal Cost (MC)**: The additional cost of producing one more unit of output. As production increases, AFC decreases due to the spreading of fixed costs over more units. AVC initially decreases, reaches a minimum, and then starts increasing due to
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Transcribed Image Text:**Cost Data for a Purely Competitive Producer** The following table presents the cost data for a purely competitive producer: | **Total Product** | **Average Fixed Cost** | **Average Variable Cost** | **Average Total Cost** | **Marginal Cost** | |-------------------|------------------------|---------------------------|------------------------|-------------------| | 0 | | | | $ 45 | | 1 | $60.00 | $45.00 | $105.00 | $ 45 | | 2 | $30.00 | $42.50 | $72.50 | $ 40 | | 3 | $20.00 | $40.00 | $60.00 | $ 35 | | 4 | $15.00 | $37.50 | $52.50 | $ 30 | | 5 | $12.00 | $37.00 | $49.00 | $ 35 | | 6 | $10.00 | $37.50 | $47.50 | $ 40 | | 7 | $ 8.57 | $38.57 | $47.14 | $ 45 | | 8 | $ 7.50 | $40.63 | $48.13 | $ 55 | | 9 | $ 6.67 | $43.33 | $50.00 | $ 65 | | 10 | $ 6.00 | $46.50 | $52.50 | $ 75 | ### Explanation: - **Total Product**: The quantity of output produced. - **Average Fixed Cost (AFC)**: The fixed cost per unit of output. As production increases, AFC declines. - **Average Variable Cost (AVC)**: The variable cost per unit of output. - **Average Total Cost (ATC)**: The sum of AFC and AVC per unit of output. - **Marginal Cost (MC)**: The additional cost of producing one more unit of output. As production increases, AFC decreases due to the spreading of fixed costs over more units. AVC initially decreases, reaches a minimum, and then starts increasing due to
### Problem Scenario #### c. At a product price of $32: **(i) Will this firm produce in the short run?** - [Selection Box: Click to select] **(ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output?** - [Selection Box: Click to select] output = [Input Box] units per firm **(iii) What economic profit or loss will the firm realize per unit of output?** - [Selection Box: Click to select] per unit = $[Input Box] #### d. Short-Run Supply Schedule: Complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3). ### Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (–) in front of those numbers.
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Transcribed Image Text:### Problem Scenario #### c. At a product price of $32: **(i) Will this firm produce in the short run?** - [Selection Box: Click to select] **(ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output?** - [Selection Box: Click to select] output = [Input Box] units per firm **(iii) What economic profit or loss will the firm realize per unit of output?** - [Selection Box: Click to select] per unit = $[Input Box] #### d. Short-Run Supply Schedule: Complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3). ### Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (–) in front of those numbers.
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