Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 1SQ
To determine
The profit of the firm at price OB.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Case D: Apex Company.
Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit.
Quantity (units)
0
1
2
3
4
5
6
7
8
9
10
Total Variable Cost (TVC)
0
100
180
220
300
390
500
640
800
1000
1250
Answer the following questions:
What is the profit-maximizing level of output? Calculate Apex’s profit.
If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s
profit (or loss) in this case?
If the market price dropped further to $40, what is the profit-maximizing level of output? What
is Apex’s profit (or loss) in this case?
Comment on your answers to parts (2) and (3).
Suppose a perfectly competitive firm is operating in short run. The information of MR, Q, ATC and AVC are 25 taka, 60 unit, 35taka and 15taka respectively. Calculate firm’s profit/loss and total fixed cost. From these calculations and based on all the given information, can you conclude about the firm’s decision in short run? Explain your reasoning with the help of a suitable diagram. Show all the relevant information in your diagram.[Q=profit maximizing output and MR=marginal revenue].
Don,t copy from anywhere. Answer must be correct. Do step by step
A purely competitive firm finds that the market price for its product is $25.00. It has a fixed cost of $100.00 and a variable cost of $10.00 per unit for the first 50 units and then $30.00 per unit for all successive units.
Instructions: Round your answers to 2 decimal places.
a. Does price equal or exceed average variable cost for the first 50 units?
(Click to select) No Yes
What is the average variable cost for the first 50 units?
b. Does price equal or exceed average variable cost for the first 100 units?
(Click to select) No Yes
What is the average variable cost for the first 100 units?
c. What is the marginal cost per unit for the first 50 units?
What is the marginal cost for units 51 and higher?
d. For each of the first 50 units, does MR exceed MC?
(Click to select) No Yes
What about for units 51 and higher?
(Click to select) No Yes…
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
Knowledge Booster
Similar questions
- Answer the next question on the basis of the following cost data: Output Total cost 1 40 2 54 87 4 124 190 13) Refer to the above data. Given a price of $33, the profit-maximizing level of output for this firm: a. is 3. b. is 4. c. is 5. d. cannot be determined from the information given. 3.arrow_forwardA perfectly competitive firm faces the short-run cost schedule shown in Table (a)Calculate average total cost (ATC=TC/Q), marginal cost (MC=ATC/AQ) and marginal revenue (MR-ATR/AQ) for each level of output. The price per unit of output is £16 b) Plot ATC, MC and MR on a graph and mark the profit-maximising output. At what output is profit maximised? c) How much profit/loss is made at the optimum level of output? Assume market price declines to £9 per unit. If the firm's average variable cost is £9.5, should the firm shut down in the short run? In the long run? Explain. If the firm is typical of other firms, what price will it charge in the long run? Explain.arrow_forwardA firm in a perfectly competitive industry knows the following about its costs and revenue. The firm would like to maximize profit and has hired a consultant for advice. Price Q of Output Total Revenue Total Cost Total Fixed Cost 10 500 TR? 9,400 TFC ? Total Variable Cost Average Total Cost Average Variable Cost MC 6,500 is at minimum level AVC? MC? Total Revenue Number Total Fixed Cost Number Average Variable Cost Number Marginal Cost Number What is the value of the profit or loss (-) at the current output ( include the - sign if it's a loss) Number Consultant's Advice: As a consultant, what advice would you give to this firm:(Choose ONE answer from the following) Number 1. Firm should do nothing; it is already profit maximizing/loss minimizing 2. Firm should reduce quantity of output 3. Firm should increase quantity of output 4. Firm should shutdown operations 5. The given number set is inconsistentarrow_forward
- 0 1 2 3 4 5 Problem 1. Fill out the missing data. Quantity Total Cost Marginal Cost Fixed Cost Variable Cost Average Total Cost - Average Variable Cost 7 10 37 22.5 10.50 15 The market price for the firm's output is $14.50. a) What quantity will the firm produce? Q = b) What is the firm's profit? Profit= P = P = c) What is the breakeven price? d) What is the shutdown price? f) Are consumers or producers affected by the tax more? Explain.arrow_forwardQUESTION 10 Jack sells water bottles. Assume the market for water bottles is perfectly competitive. Jack sells his water bottles at the market price of $9.00. At the profit-maximising output level of 51 water bottles, Jack's average total cost is $4.40 per water bottle. The minimum average variable cost is $3.90 per water bottle. Answer the following questions: a. Jack's economic profit or loss is decimal places (ie: to the nearest cent). (use a negative value if a loss). Answer in dollars, rounded to two b. State whether the following statement is true or false: "At the profit-maximising quantity, Jack is making an economic profit of $4.60 per water bottle." Type T for true, or F for false c. State whether the following statement is true or false: "Jack should shut down if the market price is $3.85 per water bottle." Type T for true, or F for falsearrow_forwardA profit-maximizing firm decides to shut-down production in the short-run. Its total fixed cost of production is $100, i.e. TFC = $100. Which of the following statements is true? a If the firm produced, the firm's revenues would have been lower than $100. bIf the firm produced, the firm's total variable cost must be lower than $100. cIf the firm produced, the firm's losses would have been higher than $100. dIf the firm produced, the firm's total variable cost would have been higher than $100.arrow_forward
- Q5. Typical perfectly competitive firm with Total Cost Function TC 200 + 25Q - 6Q + (1/3)Q' , faces price of $70. Determine the profit-maximizing output and the amount of its short-run profits or losses.arrow_forwardA Milton company works in perfect competition market, its total cost curve in short run isgiven in this function:TC = 200 − 4Q + 0.5Q2a. What output level should the firm produce to maximize profit? knowing that averagerevenue is $10.b. What is the firm profit at this level of output?arrow_forwardA Milton company works in perfect competition market, its total cost curve in short run is given in this function:TC = 200 − 4Q + 0.5Q2a. What output level should the firm produce to maximize profit? knowing that average revenue is $10.b. What is the firm profit at this level of output?arrow_forward
- A profit-maximising firm in a competitive market is currently producing 1,000units 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?arrow_forwardB) Consider a perfectly competitive firm with the following short-run total costs: SRTC = b + j q x. The corresponding short-run marginal cost is given by:SRMC = xj q x-1. 1. If the market price is n, how much output (q) will the firm produce? What will thefirm’s profits are at a price of n? 2. Find the quantity of output for which marginal cost equals average variable cost.What does this information tell you about this firm’s decision about whether toshut down in the short run rather than produce a positive quantity of output?arrow_forwardIf the total cost of producing 11 units of output in this figure is $16, the firm's economic profit at 11 units of output is: $104. $72. $8. –$8.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
