Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: Price Quantity Total Cost $3 $5 $5 $5 1 $5 2 $8 $5 $12 $17 $23 3 $5 4 $5 Refer to Table 14-11. If the firm is producing 2 units of output, it should fewer units of output because its marginal revenue is less than its marginal cost. produce fewer units of output because its marginal revenue is greater than its marginal cost. produce more units of output because its marginal revenue is greater than its marginal cost. produce more units of output because its marginal revenue is less than its marginal cost.

Table 14-11 Suppose that a firm in a competitive market faces the following prices and costs: Price Quantity Total Cost $3 $5 $5 $5 1 $5 2 $8 $5 $12 $17 $23 3 $5 4 $5 Refer to Table 14-11. If the firm is producing 2 units of output, it should fewer units of output because its marginal revenue is less than its marginal cost. produce fewer units of output because its marginal revenue is greater than its marginal cost. produce more units of output because its marginal revenue is greater than its marginal cost. produce more units of output because its marginal revenue is less than its marginal cost.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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$150 $145 $140 MC $135 $130 $125 $120 $115 ATC $110 $105 $100 $95 $90 $85 $80 AVC $75 $70 $65 $60 $55 $50 $45 $40 $35 $30 $25 0 1 2 3 5 6 Quantity Produced 7 8 9 10 11 The graph above shows the cost functions for a perfectly competitive profit maximizing firm. If the market price of the product is $70 per unit, the firm will produce units, will cover make an economic profit of dollars. dollars of its fixed cost, and will
67. In a perfectly competitive market, industry demand is given by Q = 1000 – 20P. The typical firm’s average cost is TC = 300 + Q2 /3, and marginal cost by MC = (2/3)Q. Suppose there are 10 identical firms in the market. What is the market supply? A. 30Q B. 40Q C. 15Q D. 5Q
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Complete the table below to answer questions 46. and 47.: Price Quantity Cost $18 16 14 12 10 8 642 012345678 Total Revenue Marginal Revenue Marginal $0 X $2.00 $16 $16 2.50 28 12 3.00 3.50 4.00 4.50 5.00 5.50 6.00 What is the profit-maximizing number of units to produce? What is the profit-maximizing price? 46 46. a. 2 b. 4 c. 6 d. 8 47. a. $14 b. $10 c. $6 d. $4
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3 Suppose an industry consists of 100 firms with identical cost structures (represented by the "typical individual firm" in the figure below). The price is $10. Price/Cost ($) 60 50 40 40 30 20 20 10 0 10 20 MC 30 30 40 40 Quantity ATC AVC 50 60 Instructions: Round your answers to the nearest whole number. The typical firm's output at the equilibrium price is units. The market output at the equilibrium price is units.
If the price is P, the firm in a perfectly competitive market is making a profit when producing the profit maximizing quantity Q1. Why would this situation lead to new entrants? Why would this increase in the number of firms competing in the market lead this firm to reduce output to Q (depicted in the right panel)? INDUSTRY S S¹ FIRM Costs - Revenue MC ATC K P P AR = MR ــة p1 Q Q¹ Use the editor to format your answer Output