Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 8, Problem 11SQP
To determine
The advice to be given to the owner of the firm.
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What is the term for the minimum level of output a firm must produce to cover its variable costs in the short run? a) Shutdown point b) Marginal cost point c) Average cost point d) Total cost point
The graph below shows a particular firms marginal revenue (mr) marginal cost (mc) and average total cost (atc) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizing profits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit?
Give you're answer by dragging the qmin to Qmax lines into their correct positions. The output will need to lie somewhere between those limits.
Bitcom, a manufacturer of electronics, estimates the following relation between marginal cost of production and monthly output: MC= $150+ 0.005Q
Compute Bitcom’s short-run supply curve for its product.
Show Calculations and can it be done in Excel?
Chapter 8 Solutions
Micro Economics For Today
Ch. 8.5 - Prob. 1YTECh. 8.5 - Prob. 2YTECh. 8 - Prob. 1SQPCh. 8 - Prob. 2SQPCh. 8 - Prob. 3SQPCh. 8 - Prob. 4SQPCh. 8 - Prob. 5SQPCh. 8 - Prob. 6SQPCh. 8 - Prob. 7SQPCh. 8 - Prob. 8SQP
Ch. 8 - Prob. 9SQPCh. 8 - Prob. 10SQPCh. 8 - Prob. 11SQPCh. 8 - Prob. 12SQPCh. 8 - Prob. 1SQCh. 8 - Prob. 2SQCh. 8 - Prob. 3SQCh. 8 - Prob. 4SQCh. 8 - Prob. 5SQCh. 8 - Prob. 6SQCh. 8 - Prob. 7SQCh. 8 - Prob. 8SQCh. 8 - Prob. 9SQCh. 8 - Prob. 10SQCh. 8 - Prob. 11SQCh. 8 - Prob. 12SQCh. 8 - Prob. 13SQCh. 8 - Prob. 14SQCh. 8 - Prob. 15SQCh. 8 - Prob. 16SQCh. 8 - Prob. 17SQCh. 8 - Prob. 18SQCh. 8 - Prob. 19SQCh. 8 - Prob. 20SQ
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- A manufacturer of electric switches in a competitive industry has a fixed monthly cost of $50,000, total monthly variable cost $100,000, and marginal cost of $5. What is the profit if the monthly production is 100,000 units? Assuming that prices of switches fluctuate from month to month, what is the lowest price the manufacturer can accept in order to stay in business in the long run and in the short run. Will those prices be the same? Show your workarrow_forwardDouglas Fur is a small manufacturer of fake-fur boots in Mississauga. The following table shows the company's total cost of production at various production quantities.arrow_forwardSuppose that the market equilibrium price for a routine service of a four-cylinder car is $270 and the minimum average variable cost of such service at your local mechanic is $300. What would you advise the owner of this business to do? Explain.arrow_forward
- Derive theoretically and graphically the supply curve of an industry.arrow_forward5 4 1 2 3 Output Alpha Limited is a perfectly competitive firm. The total cost (in dollars) of producing Q per day is given by the following cost function: C(Q) - 10+5Q+Q² Fixed Cost Variable Cost Total Cost ATC AFC AVC MCarrow_forwardThe following table shows a profit-maximizing producer's marginal costs. The firm is operating in a perfectly competitive market and has fixed costs of $500. Marginal Cost ($) 200 Quantity 1 2 150 3 100 4 170 5 230 16 300 7 420 18 600 Refer to the above information to answer this question. What is the breakeven price?arrow_forward
- If a firm's revenues do not cover its average variable costs, then that firm has reached its price taking point shutdown point marginal point opportunity marginarrow_forwardAn economist estimated that the cost function of a single-product firm is C(Q) = 100 + 20Q + 15Q² + 10Q³ Based on this information, determine: a. The fixed cost of producing 10 units of output. b. The variable cost of producing 10 units of output. c. The shutdown price if the optimal quantity of units produced is 10. d. The breakeven price if the optimal quantity of units produced is 10. g. The marginal cost when Q = 10. Think about your derivatives.arrow_forwardThe following diagram shows cost curves for a perfectly competitive firm. SMC 2.60 ATC AVC 1.60 1.50 0.80 0.70 0.60 500 800 1100 Output Price and cost (dollars)arrow_forward
- The monthly average variable costs, average total costs, and marginal costs for Alpacky, a typical alpaca wool-manufacturing firm in Peru, are shown in the table below. All firms in the industry share the same costs as Alpacky, and the industry is in long-run equilibrium. Instructions: Round your answer to the nearest cent. The market price is $ Output (units of wool) 0 1 2 3 4 5 AVC ($) 25.00 35.00 21.50 19.67 ATC ($) 19.25 26.50 23.00 21.75 19.80 21.80 MC ($) 25.00 18.00 16.00 18.00 22.00arrow_forwardPindyck & Rubinfeld, 8e. Ch 8 #7. Suppose the same rm's cost function is C(q) = 4q 2 + 16. (From #6, we also know that the market price is $20 and the industry is perfectly competitive.) (a) Find the variable cost, xed cost, average cost, average variable cost, and average xed cost. (b) Show the average cost, marginal cost, and average variable cost curves on a graph. (c) Find the output that minimizes average cost.arrow_forwardAn ice cream producer has fixed costs of $70,000 per month, and it can produce up to 15,000 ice cream tubs per month. Each tub costs $10 in the market while the producer faces variable costs of $3 per tub. a. What is the economic breakeven level of production? b.Calculate the ice cream producer's monthly profits at full capacity. What would happen to the monthly profits if another ice cream producer entered the market, driving the price of ice cream tubs down to $7 per unit?arrow_forward
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