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 14.2, Problem 4QQ
To determine
Relevance of elasticity.
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A profit-maximising firm in a competitive market is currently producing 1,000
units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000.
a) What is its profit?
b) What is its marginal cost?
c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
3. A firm faces the demand equation p = 190 – 0.6q and the total cost function
TC = 40 + 30q + 0.4q²
a. Find the profit-maximizing quantity of output.
b. Confirm that this quantity represents maximum profits.
C.
Find the price that corresponds to this quantity.
1c. Using Excel or grid paper, based on the above information, plot the demand curve, MR curve, MC curve and ATC curve. Label the profit-maximizing quantity and price, total cost, total revenue and profit.
Chapter 14 Solutions
Microeconomics
Ch. 14.2 - Prob. 1QQCh. 14.2 - The D2e segment of the demand curve D2eD1 in graph...Ch. 14.2 - Prob. 3QQCh. 14.2 - Prob. 4QQCh. 14 - Prob. 1DQCh. 14 - Prob. 2DQCh. 14 - Prob. 3DQCh. 14 - Prob. 4DQCh. 14 - Prob. 5DQCh. 14 - Prob. 6DQ
Ch. 14 - Prob. 7DQCh. 14 - Prob. 8DQCh. 14 - Prob. 9DQCh. 14 - Prob. 10DQCh. 14 - Prob. 11DQCh. 14 - Prob. 12DQCh. 14 - Prob. 13DQCh. 14 - Prob. 14DQCh. 14 - Prob. 1RQCh. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQCh. 14 - Prob. 1PCh. 14 - Prob. 2PCh. 14 - Prob. 3P
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- Answer the question on the basis of the following demand and cost data for a specific firm. (1) Price $ 12.00 11.00 10.00 9.00 8.00 7.00 6.00 Demand Data (2) Price (3) Quantity $ 10.00 6 8.85 7 8.00 8 7.00 9 6.10 10 5.00 11 4.15 12 Multiple Choice $10.00. $9.00. Cost Data Output 6 7 8 9 10 11 12 If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing price will be Total Cost $ 61 62 64 67 72 79 86arrow_forwardA profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost 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?arrow_forwardAt a market price of $35.20 a batch, what quantity does Lin's produce and what is the firm's economic profit in the short run? The table below shows the demand schedule for Lin's Fortune Cookies. The second table shows some cost data for Lin's. Price (dollars per batch) (batches per day) Quantity demanded AVC Quantity AFC (batches per day) ATC MC (dollars per batch) 84.0 S1.00 135 37 50 2 420 44.00 86 50 29 50 28.0 39.00 67 2 3 27 50 21.0 36.00 57 32 50 4 168 35.20 52 50 40 14.0 36.00 50 50 57 12.0 39.00 51 83 10.5 44.50 55arrow_forward
- Answer the question on the basis of the following demand and cost data for a specific firm. (1) Price $ 12.00 11.00 10.00 9.00 8.00 7.00 6.00 Demand Data (2) Price (3) Quantity $ 10.00 6 8.85 7 8.00 8 7.00 6.10 5.00 4.15 Multiple Choice decline to zero. fall to $8. fall by $11.50 9 10 11 12 Increase by $15. Suppose that entry into the industry changes this firm's demand schedule from columns (1) and (3) to columns (2) and (3). Economic profit will Output 6 7 8 9 Cost Data 10 11 12 Total Cost $ 61 62 64 67 72 79 86arrow_forwardA 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?arrow_forwardHelp mearrow_forward
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