ESSENTIALS OF ECONOMICS
11th Edition
ISBN: 9781260225334
Author: SCHILLER
Publisher: RENT MCG
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Question
Chapter 6, Problem 8P
a)
To determine
The total revenue per day.
b)
To determine
The
c)
To determine
The profit per unit
d)
To determine
The total profit per day
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Students have asked these similar questions
Assume that a firm in a competitive market faces the following cost information. If the market price for this firm's product is $40, calculate the profit maximizing level of output for this firm using marginal analysis. It may help to create your own cost table and fill in columns for Marginal Cost and Average Total Cost based on the Total Cost information below.
a.What is the level of profit for this firm at the profit maximizing output?
b.To convince yourself that the quantity you found is indeed the profit maximizing quantity, try calculating what the profit would be at the next higher level of output. What did you find?
c. What do you predict will happen in this market over the long run?
Suppose the market for peaches is perfectly competitive. The short-run average
total cost and marginal cost of growing peaches for an individual grower are
illustrated in the figure to the right.
Assume that the market price for peaches is $28.00 per box. What is
the profit-maximizing quantity for peach growers to produce? boxes. (Enter
your response as an integer.)
Price (dollars per box)
40-
36-
32-
28-
24-
20-
16-
12-
8-
4-
0
10
20 30 40 50 60 70 80
Output (boxes of peaches per day)
MC
ATC
90 100
oo
Q
Consider the graph. What is the value of profit when this firm is
maximizing profit? Enter the number below.
P
P*=$10
ATC* = $6
B
A
q*=10
MC
ATC
MR
q = firm
quantity
Chapter 6 Solutions
ESSENTIALS OF ECONOMICS
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Similar questions
- The demand curve and supply curve for carpet cleaning in the local market are currently as follows: Demand: Q = 1,000 - 1OP Supply: Q = 640 + 2P The total cost function for the typical carpet cleaning company is: TC= 75 + 3q2 (so that FC=75, VC=3q2 and MC= 6q), where costs are measured in dollars and q is output per year. The market is perfectly competitive. First question how do I calculate the optimal output for the typical carpet cleaning firm in the short run and how many firms would operate in the market in the short run? Second, how would I compute operating profits and total profits for the typical firm in the short run. Based on the results so far, would you say that this market is at the long-run equilibrium?arrow_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. What is its profit? What is its marginal cost? What is its average variable cost?arrow_forwardA competitive firm is maximizing its profit by selling 150 units of output. The firm’s marginal cost is $8 and its average total cost is $6. The firm’s profit amounts to what?arrow_forward
- Suppose the market for peaches is perfectly competitive. The short-run average total cost and marginal cost of growing peaches for an individual grower are illustrated in the figure to the right. Assume that the market price for peaches is $30.00 per box. What is the profit-maximizing quantity for peach growers to produce? boxes. (Enter your response as an integer.) At this level of output, profit will be $. (Enter your response rounded to the nearest dollar.) Peach growers will earn positive economic profit in the short run at any market price above $ per box. (Enter your response rounded to one decimal place.) Price (dollars per box) 40- 36- 32- 28- 24 20 16- 12- 8 4- 10 MC 20 30 40 50 60 70 80 Output (boxes of peaches per day) ▬▬ ATC 90 100 Qarrow_forwardSuppose that the market for black sweaters is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. (? 50 45 40 35 30 ATC 25 20 15 AVC 10 MC 8 10 2 4 12 14 16 18 20 QUANTITY (Thousands of sweaters) PRICE (Dollars per sweater)arrow_forwardHomework (Ch 14) 5. Profit maximization and shutting down in the short run Suppose that the market for microwave ovens is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. 100 90 80 ATC 60 50 40 30 AVC 20 MC 10 20 25 30 35 40 45 50 10 15 QUANTITY (Thousands of ovens) PRICE (Dollars per oven)arrow_forward
- 50 45 40 35 30 ATC 25 20 15 AVC 10 MC 2 4 8 10 12 14 16 18 20 QUANTITY (Thousands of shirts) PRICE (Dollars per shirt)arrow_forwardThe graph shows the average total cost (ATC) curve, the marginal cost (MC) curve, the average variable cost (AVC) curve, and the marginal revenue (MR) curve (which is also the market price) for a perfectly competitive firm that produces terrible towels. Answer the three accompanying questions, assuming that the firm is profit-maximizing and does not shut down in the short run. What is the firm's total revenue? Price $485 $450 $300 $225 205 260 Quantity 336 365 MC ATC AVC MR Parrow_forwardEconomics Questionarrow_forward
- What is the Optimum level of the output for the firm? How do you know? Explain your answer. What is the maximum price the firm can charge? At this price and output combination does the firm make economic profit of economic loss? How do you know? Explain your answer. Calculate the economic profit or loss? Show the formula you used and your calculations. What is the breakeven price? How do you know? What is the shut down price?arrow_forwardFirms in the market for soccer balls are selling in a purely competitive market. A firm in the soccer ball market has an output of 5,000 balls, which it sells for $10 each. At the output level of 5,000 the average variable cost is $6.00, the average total cost is $7.50, and the marginal cost is $10.00. What would you expect the firm to do in the short run? Why? What would you expect the market to do in the long run? Why?arrow_forwardThe graph shows the marginal cost (MC), average total cost (ATC), and marginal revenue (MR) curves for a perfectly (or purely) competitive firm. Note, for such firms, the demand (D) curve is the same as the MR curve. Answer two questions, specifying to at least one decimal place. How many units should this firm produce to maximize profit? number of units: What price will the firm receive for each unit at the profit maximizing level out output? $ MC/MR $12 9.7 5.6 D=MR MC ATC 6.6 10.2 12 16 Quantityarrow_forward
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