Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 8, Problem 8TY
To determine
Profit maximizing level of output for the firm.
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When do firms decide to shut down production in the short run? Explain it.
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suppose the average variable cost of production is $15 when output equals 110 haircuts and $17.26 when output equals 140 haircuts. If the firm wants to maximize profit how many haircuts will it produce at what cost? explain your answer.
We expect the marginal cost to increase as this firm produces more computers. But when the firm shifts from producing 1 to 2 computers, marginal cost falls. What might explain this?
Chapter 8 Solutions
Economics: Principles & Policy
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Similar questions
- According to the accompanying table, what quantity of output should the firm produce? Explain your answer.arrow_forwardUse the table below to answer the following question. Units Total Fixed Cost Total Variable of Output (dollars) Cost (dollars) 1 150 25 2 150 48 3 150 70 150 100 What is the marginal cost (MC) of producing the fourth unit of output?arrow_forwardUsing the Diagram above, answer the following questions: b). Suppose this firm produces 15 units of output. What is the variable cost of producing this level of output? What is the firm’s AVC of production when it produces 15 units of output. Explain your answer fully.arrow_forward
- The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity-0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to drawit. To refer to the graphing tutorial for this question type, please click here Price and cost 18 15 14 13 12 10 19/21 SUBMIT ANSWER 13 OF 21 QUESTIONS C OMPLETED 28 MacBook Pro 금□ F7 F8 F9 F1o F2 F3 F5arrow_forwardWe expect the marginal cost to increase as this firm produces more computers. But when the firm shifts from producing 1 to 2 computers, marginal cost falls. Why?arrow_forwardIn the long run, fixed costs arearrow_forward
- Why is it reasonable to think of normal profit as a type of cost to the firm?arrow_forwarda) How do you derive the marginal cost (MC) curve of a firm?b) How are average variable cost (AVC) and marginal cost (MC) curvesrelated? Explain.arrow_forwardThe following table shows data for quantity (Q), variable cost (VC), and fixed cost (FC) for a ski company. a) Fill the table for total cost (TC), average variable cost (AVC), average total cost (ATC), and marginal cost (MC). Make sure to show your work for at least one line. Q VC FC TC ATC AVC MC 30 1 10 30 25 30 3 45 30 4 70 30 100 30 6 135 30 b) Now suppose the firm decides to produce a quantity of 5 units (Q=5), and it sells for a price of $25 each. Answer the following: 1. Calculate the company's profits or losses 2. How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? 3. At the given quantity and price, is the marginal unit produced adding or subtracting to profits? Should the fırm produce at this level of output?arrow_forward
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