Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 8, Problem 6P
To determine
The loss when firm decides to shut down in the short run.
Introduction: Not required.
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(Minimizing Loss in the Short Run) Explain thedifferent options a firm has for minimizing losses in theshort run.
(Table: Costs for Alina's Apple Pies) Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $38, what profit (or loss) will this firm earn?Possible solutions
a profit of $80
a loss of $30
a profit of $200
Output (unit)
Total Cost (RM)
Price (RM)
-
-
1
550
660
2
670
585
3
720
510
4
740
435
5
800
360
960
285
1190
210
1520
135
2160
60
Table 3
Table 3 shows data for a firm's production and costs in the long run.
b. What is the fixed cost of this production?
d. Does the firm make a profit or loss?
e. Can we consider this is an imperfectly competitive firm? Why?
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- of 5. The maximum value of profit is -$22 which occurs at a value Q=4. Fixed costs are $30. (a) Find the equation. (b) Graph. (c) What would you advise this firm to do in the short-run and in the long-run?arrow_forward(Table: Costs for Alina's Apple Pies) Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $38, what profit (or loss) will this firm earn? a profit of $200 a loss of $30 T a loss of $200 a profit of $80 This is what I think the answerisarrow_forwardOutput (unit) Total Cost (RM) Price (RM) 1 550 660 2 670 585 3 720 510 4 740 435 800 360 960 285 1190 210 135 60 8 1520 2160 Table 3 Table 3 shows data for a firm's production and costs in the long run. a. Based on Table 3, compute the marginal cost, average cost, marginal revenue, and average revenue as the output increases from 0 to 9 units. C. Based on your calculation from question (a), show the quantity and price where the equilibrium condition is found.arrow_forward
- (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 product is $150. Profit/Output FC VC TC TR Lossarrow_forward(1.) Johnny Rockabilly has just finished recording his latest CD. His record company marketing department determines that the demand for the CD is as follows: Number of CDs Price $24 10,000 22 20,000 20 30,000 18 40,000 6 50,000 3 60,000 The company can produce the CD with no fixed cost and a variable cost of $12 per CD. a. Find total revenues and marginal revenues for each of the quantities. b. What quantity of CDs would maximize profit? What would the price be?arrow_forwardSuppose for a single firm thatP = 15TC = 3Q + 2Q2 (a) What is the profit-maximizing quantity? (b) What is the profit at the profit-maximizing quantity? Only typed Answerarrow_forward
- 6 If a company’s total revenue is $1,744,322, their explicit costs are $863,214, and their implicit costs are $506,688, then what is their Accounting profit? What is their economic profit? (Show your work).arrow_forwardDere T:n? (Key Question) Assume the following cost data are for a purely competitive producer: 21-4 Average variable Average total Average fixed Marginal cost Total Product cost cost cost $45 40 $105.00 72.50 60.00 52.50 49.00 47.50 $45.00 42.50 40.00 $60.00 30.00 20.00 15.00 12.00 10.00 35 30 37.50 37.00 37.50 38.57 40.63 43.33 46.50 35 40 45 6. 47.14 55 8.57 48.13 50.00 52.50 65 7.50 6.67 75 10 6.00 a. At a product price of $56, will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit-maximízing or loss-minimizing output? Explain. What economic profit or loss will the firm realize per unit of output? b. Answer the relevant questions of 4a assuming product price is $41. c. Answer the relevant questions of 4a assuming product price is $32. d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3). (4) Quantity supplied, 1500 firms…arrow_forward(29. At 100 output, marginal revenue is less than marginal cost) True False 30. In relation to question number 29, producer should produce more up to 440. True Falsearrow_forward
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