Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 8, Problem 4P
To determine
Complete the table and answer the subparts.
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Q23
Suppose a perfectly competitive firm is currently operating with the following information: Output = 1500 tonnesAverage total cost = $627 per tonneAverage variable cost = $614 per tonneMarginal revenue = $620 per tonneMarginal cost = $620 per tonneAt the current level of output, this firm is _____ profit and is an earning economic profit of _____.
a.
Maximising; -$10500.
b.
Not maximising; -$10500.
c.
Maximising; $10500.
d.
Maximising; $9000.
e.
Not maximising; -$9000.
only typed answer
Assume a competitive firm faces a market price of $120, a cost curve of:
C = 13q3 + 20q + 500,
and a marginal cost of:
MC = q2 +20.
What is the firm's profit maximizing output level?
?? Units (round your answer to two decimal places)
What is the firm's profit maximizing price?
??? (round to the nearest penny)
What is the firm's profit?
??? (round to the nearest npenny)
In the short-run, this firm should ??
produce or shut down??
If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm _____.
Question 15 options:
a
must decrease output to increase profit
b
must increase output to increase profit
c
is maximizing profit
d
must shut-down to increase profit
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- (Short-Run Profit Maximization) A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm's products is $150. Output FC VC TC TR Proft/Loss 0 $100 $0 _______ ________ ____________ 1 $100 $100 _______ ________ ____________ 2 $100 $180 _______ ________ ____________ 3 $100 $300 ________ ________ ____________ 4 $100 $440 _________ _________ ____________ 5 $100 $600 _________ _________ ____________ 6 $100 $780 _________ _________ ____________ a. Complete the table. b. At what output rate does the firm maximize profit or minimize loss? c. What is the firm's marginal revenue at each positive level of output? Its average revenue? d. What can you say about the relationship between marginal…arrow_forwardA perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $150. Output FC VC TC TR Profit/Loss 0 $100 $ 0 ___ ___ ___ 1 100 100 ___ ___ ___ 2 100 180 ___ ___ ___ 3 100 300 ___ ___ ___ 4 100 440 ___ ___ ___ 5 100 600 ___ ___ ___ 6 100…arrow_forwardQUESTION 20 Study the table below which represents the cost and price schedules facing a perfectly competitive firm that manufactures bulbs. Use this information to answer the question. Quantity of the product 0 1 2 3 4 Price per unit (R) 10 10 10 10 10 10 c) d) 38022222 Total revenue Total profit (R) -10 -9 -5 -6 Marginal cost (R) . 9 6 8 10 13 Average variable cost (R) 9,00 7,50 7,67 8,25 9,20 This perfectly competitive firm will produce a) 3 bulbs, since losses are minimised. b) 4 bulbs, but it will consider shutting down in the short run. 4 bulbs, since at this production level it earns normal profit. 4 bulbs and will stay in operation.arrow_forward
- Use table to find the required values: Price $32 Quantity 400,000 Explicit costs $3,500,000 Implicit costs $4,100,000 (A) Calculate total revenue. (B) Calculate accounting profit. (C) Calculate economic cost. (D) Calculate economic profit.arrow_forwardRequired information The following figure shows the costs for a perfectly competitive producer. AVC, ATC, MC $45 40 35 30 25 201 15 10 5 0 C 10 20 30 40 50 60 70 80 90 100 ATC AVC Output per period Refer to the above figure to answer this question. If the price of the product is $35, what is the profit-maximizing output?arrow_forwardRequired information The following figure shows the costs for a perfectly competitive producer: AVC, ATC, MC $46 235 30 25 20 15 10 5 0 MC 10 20 30 40 50 60 70 80 90 100 ATC AVC Output per period Refer to the above figure to answer this question. If the price of the product is $10, what is the profit-maximizing (or loss-minimizing) output?arrow_forward
- Based on the table below for a perfectly competitive firm: Quantity Fixed Variable Total Cost Cost Cost Marginal Cost ****: |10 20 200 50 200 100 250 300 5 500 20 1000X **** 30 40 200 300 200 800 (a) Find the marginal cost as X. (b) If the equilibrium price is $20, find the profit maximizing quantity. (c) How much profit will the firm earn?arrow_forward1. The following table shows the cost information for a perfectly competitive firm. Production Total variable cost (RM)0 01 1002 1503 2104 2905 4006 5407 7208 950 a. If the total fixed cost of the firm is RM300, calculate total cost, average cost and marginal cost. b. If the market price is RM200, calculate the firm total revenue, and total profit/loss c. Determine the level of production that will maximise the firms profits.arrow_forwardQuestion 50 The streaming entertainment industry is currently making positive economic profit. What do we expect to happen in this market in the long run? (Assume that streaming entertainment is a perfectly competitive market.) New firms will enter the industry and the market price will increase New firms will enter the industry and the market price will decrease O Firms will exit the industry and the market price will increase O Firms will exit the industry and the market price will decreasearrow_forward
- If a firm is producing at a quantity in which the marginal cost exceeds marginal revenue, the firm _____.arrow_forwardCase 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: 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 (1) and (2).arrow_forward28.The following information is available for a company that operates in a perfectly competitive market. Current Output 5000 units Current Market Price $5 Total Cost $25,000 Marginal Cost $4 Total Variable Cost $20,000 What is the best action for this firm? A-Increase output in the short run and stay in the market the long run. B-Increase output in the short run and decrease output in the long run C-Shut down in the short run and exit in the long run D-Shut down in the short run and produce in the long run E-Reduce output in the short run and increase output in the long run 29.Which of the following statements is true of a perfectly competitive market in the long run? A-No firms can enter or exit. B-All firms earn normal profits, and there is both productive and allocative efficiency. C-Individual firms produce where average variable cost equals marginal cost and marginal revenue. D-It is allocatively efficient but may or may not be productively…arrow_forward
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