EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Chapter 9, Problem 3SP
To determine
Calculate the total revenue for the business at each level of output.
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Students have asked these similar questions
Consider the following data: equilibrium price = $7.50, quantity of output produced
100 units, average total cost = $9, and average variable cost = $8. What will the
firm do and why?
=
a. Shut down in the short run, because price is below average variable cost.
b. Shut down in the short run, because price is below average total cost.
c. Continue to produce in the short run, because price is greater than average
variable cost.
d. Continue to produce in the short run, because firms are always stuck with
having to produce in the short run.
Juan makes dining room chairs in a perfectly competitive industry. He is looking for economic advice and tells you the following data about his business. (Assume cost curves have their standard shapes.)
Total revenue is $120,000,
Total fixed costs are $100,000
Total variable costs are $110,000
Marginal cost is $200/unit
Quantity produced is 600 units
What will you suggest to Juan?
A: Shut down immediately
B: Do not shut down and increase production
C: Do not shut down but decrease production
D: Do not shut down and do not change the current production level.
If a firm's total revenue is $100, it's total cost is $130, and its total fixed cost is $40. Should the firm stay in business? Explain. How does a firm in perfect competition determine its outputs to produce? Why will the firm not produce this level of output? Explain.
Chapter 9 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Draw the cost curves for a typical firm. For a given price, explain how the firm chooses the level of output that maximizes profit. At that level of output, show on your graph the total revenue of the firm. Show its total costs.arrow_forwardA profit-maximizing firm incurs an economic loss of $30,000 per year. Its fixed cost is $25,000 a year. Should the firm produce or shut down in the short run?b. Suppose instead that the firm has a fixed cost of $35,000 per year. Should the firm produce or shut down in the short run?arrow_forwardProblem 2. Restaurants in Baltimore operate under a total cost function TC(q) = 3q + 5q^2 + 30 Which part of the cost is fixed cost and which part of the cost is variable cost? What is the marginal cost, MC? What is the average total cost, ATC? What is the average variable cost, AVC? In the long run, calculate the equilibrium price and restaurants’ profits. Below what price will restaurants shut down? (Hint: Consider the AVC.)arrow_forward
- 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?arrow_forwardFigure 1 shows the short-run cost curves of a toy producer. The market has 1,000 identical producers and Table 1 shows the market demand schedule for toys. At what market prices would the firm shut down temporarily? What is the market price of a toy in long-run equilibrium? How many firms will be in the toy market in the long run? Explain your answer.arrow_forwardPlease solve these 3 questions. 1. If the firm is making a positive profit, do you expect it to persist in the long run? Why?2. What is the lowest possible price the firm would be willing to sell for in the short run?3. What is the lowest possible price the firm would be willing to sell for in the long run?arrow_forward
- My answer was wrong can I be shown explained what the right answer is?arrow_forwardSuppose the market for peaches is perfectly competitive. The short-run average total cost and marginal cost of growing peaches for an individual grower are illustrated in the figure to the right. Assume that the market price for peaches is $30.00 per box. What is the profit-maximizing quantity for peach growers to produce? boxes. (Enter your response as an integer.) At this level of output, profit will be $. (Enter your response rounded to the nearest dollar.) Peach growers will earn positive economic profit in the short run at any market price above $ per box. (Enter your response rounded to one decimal place.) Price (dollars per box) 40- 36- 32- 28- 24 20 16- 12- 8 4- 10 MC 20 30 40 50 60 70 80 Output (boxes of peaches per day) ▬▬ ATC 90 100 Qarrow_forwardRose growing is perfectly competitive and all growers have the same costs. The market price is $16 a bunch and each grower maximizes profit by producing 1,100 bunches a week. Average total cost is $18 a bunch and average variable cost is $10 a bunch. Minimum average variable cost is $5 a bunch. What is each grower's economic profit at the shutdown point? Each grower's economic profit at the shutdown point is dollars a week. >>> If the firm incurs an economic loss, indicate the loss with a minus sign. If the firm earns an economic profit, do not include a plus sign.arrow_forward
- A firm operates in a perfectly competitive market. Its marginal cost = to its marginal revenue. It is incurring economic losses . Based on this information, which of the following is true? a) An increase in output will decrease the forms economic losses. b) a decrease in output will decrease the firms economic losses. c) Any change in output will fail to result in positive economic profits. d) An increase in price will decrease the firms economic losses. e) the forms marginal revenue exceeds its outputs average total costarrow_forwardThe market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than average total cost. The price of fertilizer must be equal to average variable cost. The price of fertilizer must be less than marginal cost. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. Average total cost will decrease. The quantity supplied by each firm will decrease. The total quantity supplied to the market will decrease. Marginal cost will decrease. The price of fertilizer will increase.arrow_forwardShort-Run Outcomesarrow_forward
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