Suppose Mr. Mohammed, a seller in the Fruit & Vegetable Market in Al-Aweer, suddenly realized that his marginal cost was above the market price of the output. How would he react if he were a profit maximizer? Analyze.

Suppose Mr. Mohammed, a seller in the Fruit & Vegetable Market in Al-Aweer, suddenly realized that his marginal cost was above the market price of the output. How would he react if he were a profit maximizer? Analyze.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: 3. Efficiency in the production possibilities model Suppose the fictional country of Biscayne…

A: The Production Possibility Frontier is the graphical representation of the various quantities…

Q: i just need a short answer like an examples please . .. Use an appropriate example from your…

A: Accounting profit takes into account only explicit cost while economic profit takes implicit cost as…

Q: Planet Earth is protected by the Justice League, and only the Justice League. Demand for earth…

A: The payoff matrix for The Avengers and the Justice League is as follows, (when teaming up is not an…

Q: Nana sells homemade hand sanitizers at a price of 75 pesos per bottle. Suppose r bottles of…

A: Given Price of hand sanitizer = P75 per bottle The cost function of producing hand sanitizer:…

Q: Explain Social average abatement cost curve.?

A: The abatement cost of the firm is that cost for the company when the company wants to reduce the…

Q: Productive efficiency is achieved at minimum average cost, while allocative efficiency occurs when…

A: Market structure in economics describes the level of competition and market power among firms in a…

Q: Suppose that John, April, and Tristan have two production plants for producing orange juice. They…

A: Given that: O1 + O2 = 1000 (or) O2 = 1000 - O1 MP01 = 850 - O1 MP02 = 2100 - 2O2

Q: Why firm operates in the market adopting a marginal thinking(i.e. produce at MR=MC). Why do not they…

A: The condition of equality of marginal revenue and Marginal cost is the point of profit maximization…

Q: Suppose the fictional country of Olympia produces only two goods: rice and electric scooters. The…

A: The production possibilities frontier shows the most efficient use of production through the use of…

Q: You are given the profit function: Profit = 100Q – Q2 – 100 – 0.5Q2 a. In words, how would you find…

A: The objective of any firm undertaking production in the market is to maximize profit. Firms earn…

Q: It is an aspect of microeconomics that helps in analyzing the various types of demand which enables…

A: Demand is an economic theory that refers to a consumer's desire to buy products and services as well…

Q: What is then the use or relevance of the purely competitive model?

A: Pure competition is a market system in which multiple firms compete for the same clients. The best…

Q: 5. Refer to the information provided in the following figure, If this firm's cost of labor is $10…

A: Total cost is the cost incurred for the production of goods and services. TC = wL + rK

Q: In 2008, American Airlines became the first major airline in the US to announce they would begin…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Define the economic principle of opportunity cost.

A: When another item or activity is chosen, an opportunity cost is described as the amount of a…

Q: A business normally produces and sells as much as demand allows. However, sometimes is constrained…

A: The inputs required to produce a thing or service are known as factors of production, and they…

Q: Dr. D. is a critic of standard microeconomic analysis. In one of his frequent tirades, he was heard…

A: A supply curve is a line representing the level of goods and services that can be supplied in an…

Q: What is the cost of operations in the factors of production determines the price such organizations…

A: The value of operations is indeed one of the factors that could influence the price that groups…

Q: Illustrate the link between the cost-minimization problem and total cost curve. What would happen to…

A: Cost minimization is a fundamental rule utilized by makers to figure out what blend of work and…

Q: B) Is the following statements correct or incorrect? Briefly explain: i) A rational producer will…

A: A rational producer is one who wanted to maximize their profit from the business transactions.…

Q: Give one limitation of marginal analysis and explain why?

A: As economies emerged, goods and services were produced that required machinery and labor. With time,…

Q: 3. Efficiency in the production possibilities model Suppose South Africa produces only two goods:…

A: Production possibility frontier shows the possible combination of two goods which can be produced…

Q: What factors contribute to achieving allocative efficiency in a competitive market, and how does it…

A: Allocative efficiency refers to how resources are distributed optimally in a market. It means that…

Q: Marginal Efficiency of Capital" is best explained how?

A: Marginal efficiency of capital is the expected rate of return on investment at a particular level of…

Q: С О A B C K О To maximize profits, the firm whose data is shown in the graph should produce the…

A: Profit maximizing level of output is given at the point where marginal revenue (MR) equals marginal…

Q: Under what conditions would a rational firm tolerate losses on production and sale of an item?

A: Rational firms are those firm who maximise their profit with given level of resources .

Q: Susan's profit is maximized when she produces marginal cost of the last teddy bear she produces is…

A: According to question# Susan is running a teddy business in the competetive market. In the…

Q: f a firm produces the quality of output at which MR=MC, does it necessesarily earn profits? Explain…

A: Profits are the excess of revenue receipts over the costs incurred by the firm

Q: MNLogs harvested logs (with no inputs from other companies) from their property in northern…

A: a. Company Revenues cost of purchasing inputs value added MNLogs $1000 $0 $1000 MNLumber…

Q: Afcasible production combination for a firm producing/twO: outputs must.be (aOutside tlie pröduction…

A: Economics is a social science that describes human behavior regarding their unlimited wants in terms…

Q: Demonstrate your understanding of the law of diminishing marginal returns.

A: Law of diminishing marginal productivity states that the marginal production from the additional…

Q: A small farmer produces two types of crops, A and B. A and B generate $30 and $25 per bushel…

A: You have asked multiple questions. We will answer the first question for you. If u want any specific…

Q: Provide an explanation of Say's Law as well as an explanation for why this economic perspective is…

A: Supply: The quantity of the commodity that is offered by the seller to sell at a particular price…

Q: Complete the following table by indicating whether each point represents output combinations that…

A: Answer to the question is as follows:

Q: At a current level of production of 10,000 per day in its Garner plant, the marginal cost of…

A: According to the question, it is given that : Output per day is 10,000 Marginal Cost is 50 cents…

Q: Suppose that a farm manager seeks to maximize its total profit function a s given by the equation,…

A: The total profit function tells the overall financial gain from production and sales, deteemined by…

Question

Suppose Mr. Mohammed, a seller in the Fruit & Vegetable Market in Al-Aweer, suddenly
realized that his marginal cost was above the market price of the output. How would he react
if he were a profit maximizer? Analyze.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Explain what it means in terms of opportunity cost when Economic profits are positive?
For the pizza seller whose marginal, average variable, and average total cost curves are shown in the graph below, what is the profit-maximizing level of output and how much profit will this producer earn if the price of pizza is $1.50 per slice?Instructions: In the graph below, label all three curves by clicking on the dropdown to select the appropriate label. Instructions: Enter your response as a whole number. If you are entering a negative number, be sure to include a negative sign (−). When the price is $1.50 per slice, the profit-maximizing level of output is slices per day. Instructions: Enter your response rounded to the nearest penny (two decimal places). At the profit-maximizing level of output, the producer's profit is: $ per day.
Basing from the profit equation, what among the variables is most dependent to a change in price? What economic law holds true for this phenomenon? Explain.
no need for the graph could you just answer each scenario in 3 terms: optimal prize , optimal quantity and profit
Can you explain the ( Compare the values ) part and how Q = 6.5 is profit maximized?
Explain what it means in terms of opportunity cost when Economic profits are zero?
MNLOGS harvested logs (with no inputs from other companies) from their property in northern Minnesota. They sold these logs to MNLumber for $1,500 and MNLumber cut and planed the logs into lumber. MNLumber then sold the lumber for $4,000 to MNFurniture. MNFurniture used the lumber to produce 100 tables that they sold to customers for $70 each Instructions: Enter your responses as whole numbers. a. Complete the table below to calculate the value added by each firm. Cost of purchased inputs Value added Revenues Company $ MNLOGS $ MNLumber $ $ $ MNFurniture b. Suppose that all of these transactions took place in 2014. By how much did GDP increase because of these transactions? $ c. Suppose that MNLogs harvested the logs in October 2014 and sold them to MNLumber in December 2014. MNLumber then sold the finished lumber to MNFurniture in April 2015 and MNFurniture sold all 100 tables during the rest of 2015. By how much did GDP increase in 2014 and 2015 due to these transactions? GDP…
Give me both answer with full explanation
am. 116.
Vincent Pearson makes dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $3,000. The cost of the first table is $1,000, for the second it's $1,500. For each additional table he produces, the marginal cost of each table increases by $500. How many dining tables should Vincent produce, and what is the total cost of his production? He will produce five tables at a cost of $10,000. He will produce four tables at a cost of $12,000. He will produce six tables at a cost of $13,500. He will produce seven tables at a cost of $17,500.
To be efficient, outputs should be produced that minimize total cost. True or false
Your aunt gives piano lessons for $25 per hour. She also can grow tomatoes, which she can arrange and sell at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into tomatoes, she can sell them for $150 at the farmer's market. Which statement is true? O Opportunity cost of growing tomatoes is $50 and she can earn an economic profit of $25. O Opportunity cost of growing tomatoes is $125 and she can earn an economic profit of $100, Opportunity cost of growing tomatoes is $50 and she can earn an accounting profit of $25. O Opportunity cost of growing tomatoes is $125 and she can earn an accounting profit of $100,