Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134738321
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 13, Problem 13.6.5PA
To determine
Problems caused by design flaws to the innovating firm.
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Using the figure above, what is profit/loss for the firm?
Suppose Musashi runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is
$25 per shirt.
The following graph shows Musashi's total cost curve.
Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for shirts quantities zero through seven
(inclusive) that Musashi produces.
200
175
Total Revenue
150
Total Cost
125
Profit
100
75
50
25
-25
1
2
3
7
QUANTITY (Shirts)
TOTAL COST AND REVENUE (Dollars)
co
An accountant and an economist are looking at a firm’s records and market situation. The accountant exclaims “Look at this huge profit!” and the economist states flatly “They are not earning a dime.” How are they both right?
Chapter 13 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 13 - Prob. 13.1.1RQCh. 13 - Prob. 13.1.2RQCh. 13 - Prob. 13.1.3RQCh. 13 - Prob. 13.1.4PACh. 13 - Prob. 13.1.5PACh. 13 - Prob. 13.1.6PACh. 13 - Prob. 13.1.7PACh. 13 - Prob. 13.1.8PACh. 13 - Prob. 13.1.9PACh. 13 - Prob. 13.1.10PA
Ch. 13 - Prob. 13.2.1RQCh. 13 - Prob. 13.2.2RQCh. 13 - Prob. 13.2.3RQCh. 13 - Prob. 13.2.4PACh. 13 - Prob. 13.2.5PACh. 13 - Prob. 13.2.6PACh. 13 - Prob. 13.2.7PACh. 13 - Prob. 13.2.8PACh. 13 - Prob. 13.2.9PACh. 13 - Prob. 13.3.1RQCh. 13 - Prob. 13.3.2RQCh. 13 - Prob. 13.3.3RQCh. 13 - Prob. 13.3.4RQCh. 13 - Prob. 13.3.5PACh. 13 - Prob. 13.3.6PACh. 13 - Prob. 13.3.7PACh. 13 - Prob. 13.3.8PACh. 13 - Prob. 13.3.9PACh. 13 - Prob. 13.3.10PACh. 13 - Prob. 13.3.11PACh. 13 - Prob. 13.3.12PACh. 13 - Prob. 13.4.1RQCh. 13 - Prob. 13.4.2RQCh. 13 - Prob. 13.4.3RQCh. 13 - Prob. 13.4.4RQCh. 13 - Prob. 13.4.5PACh. 13 - Prob. 13.4.6PACh. 13 - Prob. 13.4.7PACh. 13 - Prob. 13.4.8PACh. 13 - Prob. 13.4.9PACh. 13 - Prob. 13.5.1RQCh. 13 - Prob. 13.5.2RQCh. 13 - Prob. 13.5.3PACh. 13 - Prob. 13.5.4PACh. 13 - Prob. 13.5.5PACh. 13 - Prob. 13.5.6PACh. 13 - Prob. 13.5.7PACh. 13 - Prob. 13.6.1RQCh. 13 - Prob. 13.6.2RQCh. 13 - Prob. 13.6.3PACh. 13 - Prob. 13.6.4PACh. 13 - Prob. 13.6.5PACh. 13 - Prob. 13.6.6PACh. 13 - Prob. 13.1CTECh. 13 - Prob. 13.2CTECh. 13 - Prob. 13.3CTE
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- 3. Profit maximization using total cost and total revenue curves Suppose Simone runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $20 per teddy bear. The following graph shows Simone's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven teddy bears that Simone produces, including zero teddy bears. 200 175 Total Revenue 150 125 Total Cost Profit 100 75 50 25 -25 1 3 4 7 8 QUANTITY (Teddy bears) TOTAL COST AND REVENUE (Dollars)arrow_forward3. Profit maximization using total cost and total revenue curves Suppose Madison operates a handicraft pop-up retail shop that sells cardigans. Assume a perfectly competitive market structure for cardigans with a market price equal to $25 per cardigan. The following graph shows Madison's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for cardigans for quantities zero through seven (including zero and seven) that Madison produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 -25 0 0 1 0 2 U 3 5 QUANTITY (Cardigans) 4 6 Total Cost 7 8 。 Total Revenue ▷ Profitarrow_forward11. Profit maximization using total cost and total revenue curves Suppose Hubert runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $20 per teddy bear. The following graph shows Hubert's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Hubert produces. 200 175 Total Revenue 150 125 Total Cost Profit 100 75 50 25 -25 3 QUANTITY (Teddy bears) 1 2 5 7 8 TOTAL COST AND REVENUE (Dollars)arrow_forward
- If the firms are earning abnormal profit how will the number of firms in industry change?arrow_forwardSuppose that Tommy Hilfiger's marginal cost of a jacket is $200 and at one of the firm's shops, total fixed cost is $500 a day. The profit maximizing number of jackets sold in this shop is 30 a day. Then the shops nearby from other retailers start advertising their jackets. The Tommy Hilfiger shop decides to spend $1,000 a day advertising its jackets, and its profit maximizing number of jackets sold jumps to 60 a day. Before advertising: Suppose that the price elasticity of demand is 2. Can you compute the price of a Tommy Hilfiger jacket? And the markup? Please, compute the amount of maximal profits.arrow_forwardBriefly explain how the total revenue for a profit-seeking firm is determined.arrow_forward
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