EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 9, Problem 2SP
(a)
To determine
Calculate the total revenue for business at each level of output.
(b)
To determine
Calculate the total profit for the business at each rate of output.
(c)
To determine
Identify whether the company operates in the short run or long run.
(d)
To determine
Calculate the profit maximizing output of the firm.
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a) A profit-maximizing business incurs an economic loss of $10,000 per year. Its fixed cost is $15,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run? b) Suppose instead that this business has a fixed cost of $6,000 per year. Should it produce or shut down in the short run? Should it stay in the industry or exit in the long run?
Marginal cost= 2x+3
Average variable cost= x+3
Variable cost=x^2 + 3x
x is the daily output. Product's price is 13 dollars.
Part a) Calculate the level of output that will be produced.
Part b) Calculate the producer surplus of the firm.
Part c) The fixed costs are 5 dollars. In the short run, is the firm making a 0 economic profit, a positive profit, or a negative profit? Explain why.
QUESTION 2
A firm has the following revenue and cost functions.
TR= 90 Q - Q^2
TC=2Q^2 + 30Q
Determine the quantity level at which the firm maximizes its total profit.(Hint: use marginal revenue=marginal cost rule)
Chapter 9 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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