Exercise 4. A publisher for textbooks has a total cost of TC(Q) = 25,000 − 50Q...

Exercise 4. A publisher for textbooks has a total cost of TC(Q) = 25,000 − 50Q + 15Q^2.

a) Find the publisher’s marginal cost, average cost, average variable cost, and average fixed cost.

b) Find the value of Q for where the marginal cost curve crosses the average cost curve and average variable cost curve.

c) Find the output elasticity ε_TC,Q

Solutions

Expert Solution

TC = 25000-50Q+ 15Q²

a) MC = -50+ 30Q

AC = TC/ Q = 25,000/Q - 50 + 15Q

AC = AFC + AVC

AFC = -50

AVC = 25,000/Q + 15Q

b) MC = AC

-50+30Q = 25,000/Q -50 + 15Q

15 Q² = 25,000

Q = 40.82

MC = AVC

-50+ 30Q = 25,000/Q + 15Q

-50Q +15Q² = 25,000

15Q² -50Q -25,000 = 0

c) Output elasticity = {dTC/dQ}*{Q/TC}

= (-50+30Q)*{Q/(25,000-50Q+15Q²)}

= (-50+30Q)/(25,000/Q -50 + 15Q)

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

A firm has the following relationship between output (Q) and total cost (TC): Q TC 0...

A firm has the following relationship between output (Q) and total cost (TC): Q TC 0 $100 1 110 2 130 3 160 4 200 5 250 6 310 7 380 8 460 9 550 10 650 Say the firm is a perfect competitor. If the market price for its product is $ 60, at what output level will this firm produce at (as a profit maximizer)? At the output level in (a), are firms in this industry making a...

4. Consider a firm with total cost: TC = 200 +2q + 4q2, where q is...

4. Consider a firm with total cost: TC = 200 +2q + 4q2, where q is output. (Decimals OK!) a.[1] Is this a Short Run or a Long Run Total Cost function? Explain how you know. b.[3] Find the equations for Marginal Cost, Average Total Cost and Average Variable Cost. c.[2] What is the minimum efficient scale of production for this firm? d.[1] Over what quantities does this firm exhibit diseconomies of scale? e.[4] If this represents the cost curve...

Assume that a firm in perfectly competitive industry has the following total cost schedule: Q TC...

Assume that a firm in perfectly competitive industry has the following total cost schedule: Q TC 10 110 15 150 20 180 25 225 30 300 35 385 40 480 Calculate the marginal cost and average cost schedule for the firm. If the prevailing market price is $17 per unit, how many units will be produced and sold? What at the profits per unit? What are the total profits? Is the industry in long-run equilibrium at this price?

Whitehill Publishing, a publisher of academic textbooks, has made an offer to acquire Yellowtape, a publisher...

Whitehill Publishing, a publisher of academic textbooks, has made an offer to acquire Yellowtape, a publisher of children’s books. The management teams at both companies have tentatively agreed upon a transaction value of Rs 56 per share for Yellowtape but are presently negotiating alternative methods of payment. Data used for the analysis of the transaction is given below Whitehill Publishing Yellowtape Pre-merger Stock Price Rs 80 Rs 48 Number of shares outstanding (millions) 30 20 Pre-merger market value (millions) Rs...

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).

Consider a monopoly with a sort run total cost of TC= 36+Q^2 - and marginal cost:...

Consider a monopoly with a sort run total cost of TC= 36+Q^2 - and marginal cost: MC=2Q - facing a market demand curve of P=36-Q. QUESTION: Graph and calculate the consumer surplus, profit, and deadweight loss to welfare.

Consider a monopoly firm that faces the following demand curve, total cost curve, and marginal cost: P(Q) = 120 – 4Q; TC(Q) = 400 + 4Q; MC = 4

Consider a monopoly firm that faces the following demand curve, total cost curve, and marginal cost: P(Q) = 120 – 4Q; TC(Q) = 400 + 4Q; MC = 4a. What is the marginal revenue (MR) equation?b. Determine the profit maximizing level of production for this monopolist.c. What is the price that the monopolist will charge at the profit maximizing level of production?d. What is the monopolists’ profit at the profit maximizing level of output?e. Suppose the government regulates the industry...

Suppose the demand of the good is P = 10 - Q. A monopolist's total cost is TC = 2 + 4Q.

Suppose the demand of the good is P = 10 - Q. A monopolist's total cost is TC = 2 + 4Q. What's the optimal price and quantity of the monopolist?calculate the monopolist's profit (or loss)also calculate the deadweight loss from monopoly

Q1. Assume a perfectly competitive firm's total cost (TC) for differents levels of oututes Q is...

Q1. Assume a perfectly competitive firm's total cost (TC) for differents levels of oututes Q is given by: Q TC 0 50 1 100 2 140 3 170 4 190 5 210 6 230 7 260 8 300 9 350 10 410 In the table format for the range of output (Q) provided determine: average total costs, average fixed cost, average variable costs, and marginal costs. At a price of $35 how many units will be produced in the short...

Consider a firm with total costs represented by TC=8+1/2Q2 and a corresponding marginal cost of Q(MC=Q)...

Consider a firm with total costs represented by TC=8+1/2Q2 and a corresponding marginal cost of Q(MC=Q) 1) Graph the ATC and MC, be certain to label the lowest point of the ATC Consider that the firm faces a price of $10 2) Find the optimal quantity 3) Using the ATC/MC graph, find and diagram, the total cost, total revenue, and any profit or loss at the optimal quantity.

Subjects