Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 14, Problem 14.3.5PA
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11. 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)
The firm depicted by the graph below is producing q0 level of output. Given its costs, is the firm producing at the profit-maximizing/loss minimizing level of output? Briefly explain why or why not.
Briefly explain using a graph whether given statement is true or false. “If firms in a monopolistically competitive industry are earning economic profits, new firms will enter the industry. Eventually, the representative firm will find that its demand curve has shifted to the left until it is just tangent to its average cost curve and it is earning zero profit. Because firms are earning zero profit at that point, some firms will leave the industry, and the representative firm will find that its demand curve will shift to the right. In long-run equilibrium, price will be above average total cost and each firm with make economic profit.”
Chapter 14 Solutions
Microeconomics (7th Edition)
Ch. 14 - Prob. 14.1.1RQCh. 14 - Prob. 14.1.2RQCh. 14 - Prob. 14.1.3RQCh. 14 - Prob. 14.1.4PACh. 14 - Prob. 14.1.5PACh. 14 - Prob. 14.1.6PACh. 14 - Prob. 14.1.7PACh. 14 - Prob. 14.1.8PACh. 14 - Prob. 14.1.9PACh. 14 - Prob. 14.1.10PA
Ch. 14 - Prob. 14.2.1RQCh. 14 - Prob. 14.2.2RQCh. 14 - Prob. 14.2.3RQCh. 14 - Prob. 14.2.4RQCh. 14 - Prob. 14.2.5PACh. 14 - Prob. 14.2.6PACh. 14 - Prob. 14.2.7PACh. 14 - Prob. 14.2.8PACh. 14 - Prob. 14.2.9PACh. 14 - Prob. 14.2.10PACh. 14 - Prob. 14.2.11PACh. 14 - Prob. 14.2.12PACh. 14 - Prob. 14.2.13PACh. 14 - Prob. 14.2.14PACh. 14 - Prob. 14.2.15PACh. 14 - Prob. 14.2.16PACh. 14 - Prob. 14.2.17PACh. 14 - Prob. 14.2.18PACh. 14 - Prob. 14.3.1RQCh. 14 - Prob. 14.3.2RQCh. 14 - Prob. 14.3.3PACh. 14 - Prob. 14.3.4PACh. 14 - Prob. 14.3.5PACh. 14 - Prob. 14.3.6PACh. 14 - Prob. 14.4.1RQCh. 14 - Prob. 14.4.2RQCh. 14 - Prob. 14.4.3PACh. 14 - Prob. 14.4.4PACh. 14 - Prob. 14.4.5PACh. 14 - Prob. 14.4.6PACh. 14 - Prob. 14.4.7PACh. 14 - Prob. 14.4.8PACh. 14 - Prob. 14.2CTECh. 14 - Prob. 14.3CTE
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