Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 10.3, Problem 2QQ
To determine
Changes in marginal cost and marginal revenue.
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A profit-maximizing firm in a competitive market is currently producing 500 units of output. It has
average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b.
What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more
than, less than, or exactly 100 units?
i. Calculate the marginal cost, marginal revenue and profit for each unitof production. ii. How many units should the firm produce to maximise profit?
Firms experience a break even point when
a. Total revenue is greater than total cost
b. Marginal cost os equal to marginal revenue
c. Average fixed cost is equal to average variable cost
d. Marginal revenue is zero
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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
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- Sal's Sneakers Price $250 $225 MC, MC2 $200 $175 $150 $125 $100 $75 $50 $25 MR 10 20 30 40 50 60 70 80 90 100 Quantity The marginal cost for Sal's Sneakers has fallen from MC1 to MC2. How will Sal's total revenue change? Multiple Choice Total revenue will increase.arrow_forwardMarginal profit is negative when A. output exceeds the profit-maximizing level. B. total cost exceeds total revenue. C. marginal revenue is negative. D. profit is negative.arrow_forwardLaura’s cleaning service is a profit-maximising, competitive firm. Laura cleans awhole house for $156. Her total cost each day is $1680, of which $480 is a fixed cost. She cleans 8 houses a day.(a)Should Laura shutdown her business in the short-run, assuming that she cannot recover her fixed cost?(b) Should she exit in the long-run?arrow_forward
- Suppose fixed costs are $10,000, variable costs are $40,000 and the price of the good is $10 and quantity of the good the firm sells is $10,000. A. Caluclate Total Costs. B. Caluclate Total Revenue. C. Calculate the Firm's Profits.arrow_forwardCost MC Select one: ATC AVC ABC D Quantity C in the figure above represents the output level where the firm Quantity a. maximizes profits in the short-run. b. minimizes total costs in the short-run. C. maximizes profits in the long-run. d. minimizes marginal costs in the long-run. e. None of the above.arrow_forwardWhat is true with profit maximization of the firm using the Total Revenue Total Cost approach? PLEASE EXPLAIN A. The only requirement to find the optimal output that maximizes economic profit is that the difference between the total revenue and the total cost is the highest B. The total revenue should be lower than the total cost C. The total revenue should be higher than the total cost D. A and B are correct E. A and C are correctarrow_forward
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