ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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What are the short-run and long-run costs of the production of Walmart?
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- (1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…arrow_forwardUsing the figure above, what is the total revenue for the firm?arrow_forwardwhat are the maximum profits this firm can earn?arrow_forward
- If Redstone wishes to maximize its profit margin, how many units should it produce?arrow_forwardIf you're a manager in a highly competitive business such where should you put your most effort to maximize profit? Pricing or cost cutting?arrow_forwardWhen will a business shut-down in the short-run?arrow_forward
- Please show working and calculations.arrow_forwardAriana Grande has just finished recording her latestCD. Her record company’s marketing departmentdetermines that the demand for the CD is asfollows:Price Number of CDs$24 10,00022 20,00020 30,00018 40,00016 50,00014 60,000The company can produce the CD with no fixed costand a variable cost of $5 per CD.a. Find total revenue for quantity equal to 10,000,20,000, and so on. What is the marginal revenuefor each 10,000 increase in the quantity sold?arrow_forwardWhat adjustments should be anticipated in the long run and how would you calculate the new optimal quantity and price?arrow_forward
- In the short run, the firm shouldarrow_forwardDel's and Rodney's are two plumbing services in a gentrifying area of South East London. Within the area they service, the two firms operate as a duopoly and together serve one hundred percent of the available local market. One of their key lines of business is visiting customer's homes to install a new shower rail. A student project has been investigating the local plumbing business and has estimated the following information for Del's and Rodney's: Total demand for new shower rails per week is given by P = 200 - 4Q Where Q is total market demand and can be divided between Del's (qd) and Rodney's (qr) such that Q = qd + qr Assuming that the marginal cost of serving an extra customer is £40 for each, and that marginal revenue for Del is given by MRd 2008qd - 4qr And marginal revenue for Rodney is given by MRr Then 2008qr - 4qd 8 CONTINUEDarrow_forwardThe following graph plots daily cost curves for a firm operating in the competitive market for jumpsuits. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE (Dollars per jumpsult) 50 45 40 35 30 25 20 15 10 5 10 W 0 Y ATC AVC 2 MC 4 8 QUANTITY (Thousands of jumpsuits per day) 6 10 + 14 16 18 12 20 Profit or Loss In the short run, given a market price equal to $15 per jumpsuit, the firm should produce a daily quantity of of On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $15 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. The rectangular area represents a rt-run thousand per day for the firm. jumpsuits.arrow_forward
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