Question
In: Economics
The firm's demand is as follows: Total variable costs are: Price Quantity Quantity TVC $18 2...
| The firm's demand is as follows: | Total variable costs are: | |||||
| Price | Quantity | Quantity | TVC | |||
| $18 | 2 | 2 | $15 | |||
| 16 | 3 | 3 | 21 | |||
| 15 | 4 | 4 | 27 | |||
| 14 | 5 | 5 | 32 | |||
| 13 | 6 | 6 | 37 | |||
| 12 | 7 | 7 | 44 | |||
| 10 | 8 | 8 | 52 | |||
| Fixed costs are $15 | ||||||
|
at all quantities |
||||||
1. What is the Marginal Revenue at a quantity of 5?
2, What is the Marginal Cost at a quantity of 7?
3. Using the MR-MC rule, what is the profit maximizing quantity this firm should produce?
4. How much profit do they make at this quantity?
Solutions
Expert Solution
Ans.1-
Total revenue when Quantity =4 is 4*15 = 60
Total revenue when Quantity =5 is 5* 14 = 70
therefore, marginal revenue of 5th unit = 70-60 = 10
Ans.2-
TVC at quantity of 6 = 37
TVC at quantity of 7 = 44
Therefore, MC at cost of 7 = 44-37 = 7
Ans.3-
Firm will produce output as long as MR exceeds MC which occurs till 6 units of output.Therefore, firm will produce 6 units of output.
Ans.4-
At 6 units of output :
TR = P*Q = 6*13 = 78
TC = TVC + TFC = 37+15 = 52
Thus, profit = TR-TC = 78-52 = 26
Rahul Sunny answered 2 years agoRelated Solutions
The firm's demand is as follows: Total variable costs are: Price Quantity Quantity TVC $18 2...
The firm's demand is as follows:
Total variable costs are:
Price
Quantity
Quantity
TVC
$18
2
2
$15
16
3
3
21
15
4
4
27
14
5
5
32
13
6
6
37
12
7
7
44
10
8
8
52
Fixed costs are $15
at all quantities
1. What is the Marginal Revenue at a quantity of 5?
2, What is the Marginal Cost at a quantity of 7?
3. Using the MR-MC rule, what is the profit...
The firm's demand is as follows: Total variable costs are: Price Quantity Quantity TVC $18 2...
The firm's demand is as follows:
Total variable costs are:
Price
Quantity
Quantity
TVC
$18
2
2
$15
16
3
3
21
15
4
4
27
14
5
5
32
13
6
6
37
12
7
7
44
10
8
8
52
Fixed costs are $15
at all quantities
QUESTION 1
What is the Marginal Revenue at a quantity of 5?
QUESTION 2
What is the Marginal Cost at a quantity of 7?
QUESTION 3
Using the MR-MC rule, what...
4. Suppose that a perfectly competitive firm has the following total variable costs (TVC): Quantity: 0...
4. Suppose that a perfectly competitive firm has the following
total variable costs (TVC):
Quantity: 0 1 2 3 4 5 6 7 8
TVC: $0 $20 $58 $74 $88 $106 $128 $152 $178
It also has total fixed costs (TFC) of $50. If the market price
is $18 per unit: a. Find the firm’s profit-maximizing quantity
using the marginal revenue and marginal cost approach. b. Is the
firm earning a positive profit, suffering a loss, or breaking
even?
You have collected the following data on output and total variable costs: Q TVC 1 533...
You have collected the
following data on output and total variable costs:
Q
TVC
1
533
2
1024
3
1491
4
1952
5
2425
6
2928
7
3479
8
4096
9
4797
10
5600
Over what range of
output does this firm exhibit increasing returns (increasing
MPMP), and diminishing returns (decreasing
MPMP)?
Select one:
a. Increasing returns for output levels at 2 and higher, and
decreasing returns for output levels at 3 and lower.
b. Increasing returns for output levels...
A firm serving a market operates with total variable cost TVC = Q^2. The corresponding marginal...
A firm serving a market operates with total variable cost TVC =
Q^2. The corresponding marginal cost is MC = 2Q. The firm faces a
market demand represented by P = 40 - 3Q.
a) Suppose the firm sets the uniform price that maximizes
profit. What would that price be?
(b) Suppose the firm were able to act as a perfect first degree
price-discriminating monopolist. How much would the firm’s profit
increase compared with the uniform profit-maximizing price you
found...
Quantity TFC TVC TC Total Revenue P = $136 Total Profit (+) or Loss (-) AVC...
Quantity
TFC
TVC
TC
Total Revenue P = $136
Total Profit (+) or Loss (-)
AVC
ATC
MC
MR = P
Total Revenue P = $106
Total Profit (+) or Loss (-)
Total Revenue P = $100
Total Profit (+) or Loss (-)
0
$0.00
1
$90.00
2
$170.00
3
$240.00
4
$300.00
5
$370.00
6
$450.00
7
$540.00
8
$650.00
9
$785.00
10
$945.00
Scooter the Skater
has obtained the right to make and sell custom
rollerblades on the...
Initially, the market price is pequals19, and the competitive firm's average variable cost is 18, while...
Initially, the market price is pequals19, and the competitive
firm's average variable cost is 18, while its average cost is 21.
Should it shut down? Why? This firm should
A. shut down because average cost is greater than the market
price. B. not shut down because average fixed cost is less than the
market price. C. shut down because average fixed cost is less than
the market price. D. not shut down because average variable cost is
less than...
In the short-run, in comparing the change in total variable cost (TVC) and total cost (TC)...
In the short-run, in comparing the change in total variable cost
(TVC) and total cost (TC) associated with an additional unit of
output,
Answers:
a) the change in TC is greater than the change in TVC.
b) no generalization can be made because of change in TFC.
c) both are equal to MC.
d) the change in TVC is greater than the change in TC.
The short-run marginal product of a variable input has an
inverse relationship with the:
Answers:...
Ball Bearings, Inc., faces costs of production as follows: QUANITY TOTAL FIXED COSTS (DOLLARS) TOTAL VARIABLE...
Ball Bearings, Inc., faces costs of production as follows:
QUANITY
TOTAL FIXED COSTS (DOLLARS)
TOTAL VARIABLE COSTS (DOLLARS)
0
180
0
1
180
80
2
180
140
3
180
180
4
180
240
5
180
320
6
180
450
Complete the following table by calculating the company’s
total cost, marginal cost, average fixed cost, average variable
cost, and average total cost at each level of production.
QUANITY
TOTAL COST (DOLLARS)
MARGINAL COST (DOLLARS)
AVERAGE FIXED COST (DOLLARS)
AVERAGE VARIABLE COST...
Units of Output (Q) Total Cost (TC) Total Variable Cost (TVC) Average Variable Cost (AVC) Average...
Units of Output (Q)
Total Cost (TC)
Total Variable Cost (TVC)
Average Variable Cost (AVC)
Average Fixed Cost (AFC)
Marginal Cost (MC)
0
$120
$0
N/A
N/A
N/A
1
121
2
126
3
147
4
196
5
285
6
426
7
631
8
912
9
1,281
10
1,750
4. The following Table represents a firm’s
short run costs.
a. Complete the missing cells in the Table
(10 points).
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