Shazam, a maker of magic wands, is selling in a purely competitive market.  Its output is 500 wands, which sell for $10 each.  At this level of output, the marginal cost is $10 and the average variable cost is $12.  Should the firm increase output, decrease output, or not produce?  Explain why?

Suppose at the level of output q = 100, the average variable cost is $7/unit, the marginal cost is $8/unit, the average total cost is $9/unit, and the price is $10/unit. Draw the cost (AVC, MC, AC) and marginal revenue curves for the firm and show where the firm is at q = 100.Use the diagram to answer the following questions: Is the firm making a positive profit or is it losing money (in the short run)? Explain with a reference to your diagram. • Can the firm increase its profit (in the short run)? Explain with a reference to your diagram.

QUESTION 10 Jack sells water bottles. Assume the market for water bottles is perfectly competitive. Jack sells his water bottles at the market price of $9.00. At the profit-maximising output level of 51 water bottles, Jack's average total cost is $4.40 per water bottle. The minimum average variable cost is $3.90 per water bottle. Answer the following questions: a. Jack's economic profit or loss is decimal places (ie: to the nearest cent). (use a negative value if a loss). Answer in dollars, rounded to two b. State whether the following statement is true or false: "At the profit-maximising quantity, Jack is making an economic profit of $4.60 per water bottle." Type T for true, or F for false c. State whether the following statement is true or false: "Jack should shut down if the market price is $3.85 per water bottle." Type T for true, or F for false

Consider the market for tilapia. Ripple Rock Fish Farms, a small family fishery in Ohio, and The Fishin’ Company, a large corporate supplier, are both producers of tilapia. The marginal cost curves for both firms are shown in the accompanying graph. a. Suppose the market price of tilapia is $2.50 per pound. Move point A to Ripple Rock’s quantity sold. Move point B to The Fishin’ Company’s quantity sold. b. How many pounds of tilapia do they collectively supply?________thousand pounds   c. To achieve efficient production, The Fishin’ Company should supply _____ ("more", or "less", or "the same")  it is currently producing, and Ripple Rock should supply __________ ("more", or "less", or "the same")  it is currently producing.

Tomas is the general manager for a local automated car wash. The market he operates is perfectly competitive: Every car wash in the area is charging $7 for a car wash, which is also the marginal cost per wash. What will happen to Tomas’s profits if he changes his price to $8. Why? What about a price of $5? What is his profit-maximizing price?

A firm operates two plants.  The total cost schedules for the respective plants are TC1 = 5*Q1 + .1*Q12 and TC2= 2*Q2 + .1*Q22.  The firm’s demand schedule is Q = 160 – 10*P. What is the profit maximizing output for the firm?

A firm operates two plants.  The total cost schedules for the respective plants are TC1 = 5*Q1 + .1*Q12 and TC2= 2*Q2 + .1*Q22.  The firm’s demand schedule is Q = 160 – 10*P. What is the profit maximizing output for the firm?

Determine the best level of output for a perfectly competitive firm that sells its product at P = $4 and faces TC = 0.04Q3– 0.9Q2 + 10Q + 5. Will the firm produce this level of output? Why?

The graph on the right shows cost curves for a perfectly competitive firm. Firm's Supply Curve Use the point drawing tool to identify price-quantity combinations for the prices of $20, $30, $50, and $80 per unit of output. 120- MC 110- Carefully follow the instructions above, and only draw the required objects. 100- AC 90- If there are 100 identical firms in the market, what will be the market supply (to the 80- nearest 100) at these prices? 70- AVC Price Market Supply 2 60- $20 9 50- $30 40- $50 30 20- $80 10- 0- 100 120 140 160 180 Output 20 40 60 80 étv 20 MacBook Air DII 80 F9 F5 F3 F2 #3 $ & 3 4 5 6 9 { E R Y P F G H J K > C V N M command op レレ .... P. AC, AVC, MC B ト

A profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of production is $100, i.e. TFC = $100. Which of the following statements is true?   a If the firm produced, the firm's revenues would have been lower than $100.  bIf the firm produced, the firm's total variable cost must be lower than $100. cIf the firm produced, the firm's losses would have been higher than $100. dIf the firm produced, the firm's total variable cost would have been higher than $100.