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 11, Problem 4DQ
To determine
Productive efficiency and allocative efficiency .
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LO 11.2: I can calculate marginal cost, revenue, and profit and distinguish between marginal cost
and average cost.
Suppose that Patrick's Handmade Puppets has a production cost that is given by
C(x) = 2,000 + 130x – 0.6x2 + 0.002x3 dollars
(0
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10:05 PM
O 9 37% O
A docs.google.com
In a perfectly competitive market, what
happens to a firm's profit-maximizing
level of output if the price of the
product falls? *
Because the firm maximizes profit by
setting marginal revenue equal to
O marginal cost, an increase in the price
of the product will reduce the firm's
profit-maximizing level of output.
Because the firm maximizes profit by
setting marginal revenue equal to
marginal cost, a decline in the price of
the product will not affect the firm's
profit-maximizing level of output.
Because the firm maximizes profit by
setting marginal revenue equal to
marginal cost, a decline in the price of
the product will reduce the firm's
profit-maximizing level of output.
Because the firm maximizes profit by
setting marginal revenue equal to
marginal cost, a decline in the price of
the product will increase the firm's
profit-maximizing level of output.
Consider table 3.1. What is the dollar amount of average variable cost per unit at the production level of 600 units?
TC=3205
Production
(units)
0
100
Select one:
O a. 4.04
O b. 4.34
Oc 4.74
O d. 5.04
200
300
400
500
600
700
Rent
$300
$300
$300
$300
Wages
$200
$410
$650
$900
$1,200
$300
$300
$1,520
$300
$1,905
$300 $2,300
Supplies Tools
$0
$100
50
$100
$150
$200
$250
$300
$350
$200
$300
$400
$500
$600
$700
$800
Total Cost
$600
$960
$1,350
$1,750
$2,200
$2,670
$3,205
$3,750
3205
700
300
2,205 TVC
1
-
2205/600=
3.675
A
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