nould a competitive firm ever produce when it is losing money? Why or why not? A. No, the firm should shutdown if it is making an accounting loss. B. No, the firm should shutdown if it is making an economic loss. O C. Yes, as long as revenue can cover total variable costs plus any portion of fixed costs. O D. Yes, as long as revenue can cover some portion of total variable costs.

nould a competitive firm ever produce when it is losing money? Why or why not? A. No, the firm should shutdown if it is making an accounting loss. B. No, the firm should shutdown if it is making an economic loss. O C. Yes, as long as revenue can cover total variable costs plus any portion of fixed costs. O D. Yes, as long as revenue can cover some portion of total variable costs.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The company XYZ produces chairs and its costs are given in the table below. Variable Quantity Total Costs Variable Costs Fixed Costs Value 30 $3,600 $2,400 $1,200 In the short run, should this company shut down if the price of the chair is $95/unit? a. Yes, because the average total cost is higher than the price. b. Yes, because the average variable cost is higher than the price. O c. No, because the average total cost is higher than the price. d. No, because the average variable cost is lower than the price.
QUESTION 1 What is the relationship between economic and accounting profit? O a. Economic profit may be equal to or less than accounting profit. b. Economic profit is greater than accounting profit. O c. Economic profit is less than accounting profit. O d. Economic profit is equal to accounting profit. Oe. Economic profit may be equal to or greater than accounting profit.
Conceptually a firm maximizes profit by operating at the level of output where/when; O a. the average revenue (AR) equals average cost (AC). O b. the total costs (TC) are minimized. O c. the marginal revenue (MR) equals marginal cost (MC). O d. the average revenue (AR) equals average variable cost (AVC).
In perfect competition, a firm maximizes profit in the short run by deciding Select one: O a. whether or not to enter a market O b. how much output to produce O c. what price to charge O d. how much capital to use
Q38 and Q39
on the long run average cost curve can you mark where this would be on the curve?
2.Assume the following cost data are for a purely competitive producer: see table below: Total Average Product Fixed Cost I 2 3 4 5 6 7 8 9 10 $60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 Average Variable Cost $45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 Average Marginal Total Cost Cost $105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 $45 40 35 30 35 40 45 55 65 75 a. At a product price of $66, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output. b. Answer the questions of 2a assuming product price is $46. Explain in detail. c. Answer the questions of 2a assuming product price is $38. Explain in detail. d. In the table below, 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) e. Now assume that there are 1,500…
4.
profits. If P = MC and MC
Assume Cathy's Cupcake Company operates in a perfectly competitive market producing 10,000 cupcakes per day. At this output level, marginal cost exceeds this firm's price. Assuming price exceeds average variable cost, to maximize profits Cathy's should O a. stop producing since it is earning a loss. O b. decrease their output. Oc make no adjustments as they are already maximizing their profits. Od. increase their output. Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5.000 bags of potato chips at the same total cost. Complete the following statement with the correct answer. If each produces more, the costs of Kyle's factory will exceed those of Stan's factory. Ob. more, their costs will be equal. less, the costs of Kyle's factory will exceed those of Stan's factory. Od. less, their costs will be equal. If a firm is producing where…
QUESTION 4 The shape of a firm's long-run. O variable cost curve marginal revenue curve fixed cost curve O average cost curve depends on how costs vary with scale of operations.
A perfectly competitive firm maximizes its profit by producing the output at which its marginal cost equals its O a. Average variable cost O b. Marginal revenue Oc. Average fixed cost O d. Average total cost