ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:Which of the following equations calculates the profits of a firm?
O A. Total revenues - Fixed costs
OB.
Total costs - Fixed costs
OC. Total revenues - Total costs
O D. Total revenues + Total costs
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- Safari 09:24 Wed 8 Dec VPN O 93% Screen Shot 2020-12-08 at 10.10.34 AM.png The table below shows the short-run production function for Michelle's Accounting Company. Number of Bookkeepers Total Product per Hour 1 8 20 3 40 4 55 65 6. 70 7 65 8. 55 (a) After which bookkeeper do diminishing marginal returns begin for Michelle's Accounting Company? Explain using numbers. (b) Assume Michelle's Accounting Company sells its accounting services in a perfectly competitive market at a price of $20. Calculate the marginal revenue product of the sixth bookkeeper. Show your work. (c) Michelle's Accounting Company hires bookkeepers in a perfectly competitive labor market for bookkeepers at a wage rate of $110 per hour, and the market price of services remains $20. How many bookkeepers will Michelle's Accounting Company hire to maximize its profit? Explain using marginal analysis. (d) Assume bookkeepers and accounting software are substitutes in providing accounting services by all accounting firms…arrow_forwardSuppose there are fixed costs and the marginal costs are constant. Then we know that Select one: a. average variable costs decrease continuously as output increases and lie above the marginal cost curve. cross out O O b. average total costs decrease continuously as output increases but always lie above the average variable cost curve which is constant. cross out c. average total costs are constant. X d. average total costs decrease continuously as output increases and lies above the average variable cost curve which is also decreasing continuously as output increases. cross out cross outarrow_forwardIncreasing marginal returns means that as the firm expands its output, its Select one A. long-run average total cost decreases O B. long-run average total cost increases. short-run average total cost decreases D. short-run average total cost increasesarrow_forward
- A firm will operate so long as the price O A. exceeds average variable cost. OB. equals the opportunity cost. O C. exceeds average fixed cost. O D. exceeds average total cost.arrow_forwardThe figure at right illustrates short-run cost curves for a firm. Based on this figure, which of the following is true? O A. A is the total cost curve, B is the marginal cost curve, and C is the total fixed cost curve. O B. A is the average variable cost curve, B is the total fixed cost curve, and C is the average total cost curve. O C. A is the total cost curve, B is the total variable cost curve, and C is the total fixed cost curve. O D. A is the total cost curve, B is the total variable cost curve, and C is the marginal cost curve. O E. A is the average variable cost curve, B is the average total cost curve, and C is the marginal cost curve. Quantity сarrow_forwardBob produces candles. The average total cost reaches its minimum at a quantity O A. the same as the quantity at which the average variable cost reaches its minimum. O B. lower than the quantity at which the average variable cost reaches its minimum. O C. the same as the quantity at which the marginal cost is at a maximum. O D. the same as the quantity at which the marginal cost is at a minimum. O E. greater than the quantity at which the average variable cost reaches its minimum.arrow_forward
- 4. The shape of a firm's long-run average cost curve depends o how costs vary with scale of operation. Draw a long-run average cost curve for a firm that exhibits economies of scale, constant returns to scale, and diseconomies of scale. Identify each of these sections of the cost curve and explain why each section exemplifies its specific type of return to scale.arrow_forwardCompleted 0 out of 30 Resources Submit All Question 16 of 30 The graph shows the costs, revenue, and demand facing a A profit-maximizing monopolistic competitor monopolistically competitive firm. Refer to the graph to answer the three questions. 50- Marginal cost 40- B 30 (5) 20-C Average cost The area covered by rectangle CDFE is the firm's ID 10- Demand 0- total cost. 10 20 30 40 50 60 70 80 90 100 1i0 -10- Marginal revenue total revenue. Quantity O profit. O None of the above. The area covered by rectangle A BDC is the firm's total cost. 8:19 P 46°F A E 4) 12/15/2 a Price ($)arrow_forwardConsider the three figures below, depicting possible cost functions for a firm. The horizontal axis measures output in all figures, while the vertical axis measures dollars. A B Which of the following statements are correct? Choose one or more: ⒸA. Figure A could represent the average total cost. OB. Figure B could represent the average total cost. C. Figure C could represent the average total cost. OD. If Figure B represents the average variable cost, then Figure C could not represent the average total cost. OE. If Figure B represents the marginal cost, then Figure C cannot represent the average total cost.arrow_forward
- Which of the following statements is correct? OA. Accounting profit is typically larger than economic profit. O B. Accounting profit equals the firm's revenues minus all of its costs, implicit and explicit. OC. Economic profit equals the firm's revenues minus its explicit costs O D. All of the abovearrow_forwardTable 7 Jimmy's Gigaplots Factory Quantity of gigaplots 1 ~ 3 2 4 5 679 BAC Select one: Fixed Cost O a. $22.17 O b. $22.57 O c. $16.34 O d. $22.00 aguila Variable Cost $13 $28 $64 $108 $133 Total Cost $38 $70 $110 $185 Average Average Fixed Variable Cost Cost Refer to Table 7. What is the average total cost of producing 6 gigaplots at Jimmy's Gigaplot factory? Average Total Margina Cost Costarrow_forward5,000 Total Cost 10,000 O a.) The profit is maximized. Profit Total Revenue b.) The firm should increase output 15,000 Based on this graph, which of the following statements is true at an output of 7,000 indicated by the green line? Output Oc.) The slopes of the total revenue and total cost curves are equal. O d.) The cost is rising faster than the revenue.arrow_forward
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