Question

In: Economics

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is...

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is $12, marginal cost is $9, and average variable cost is $9.50. What should the firm do and why?

D. Continue to produce because price can be increased

A. Continue to operate and reduce costs to earn a profit

C. Shut down because the price is less than the average variable cost

B. Shut down because the firm’s earning a loss of $15.00

2. For a firm in a perfectly competitive market, which of the following is true?

C. Its short-run supply curve is the marginal cost curve above the average variable cost curve.

A. Its short-run supply curve is vertical

D. Its short-run supply curve is negatively sloped.

B. Its short-run supply curve is the average variable cost curve.

3. If a profit-maximizing, perfectly competitive firm is producing at a point on the marginal cost curve between average variable cost and average total cost, it should do which of the following?

C. Continue producing in the short run

A. Shut down in the short run

D. Increase the fixed costs

B. Leave the market in the short run

4. For the perfectly competitive, profit-maximizing firm, ____________.

C. P > MR > MC

A. P = MR > MC

B. P > MR = MC

D. P = MR = MC

Solutions

Expert Solution

1. sales price is $9, output is 5,000 units, average total cost is $12, marginal cost is $9, and average variable cost is $9.50.

The firm should shut down because the price is less than AVC so it is not able to recover its variable costs

C. Shut down because the price is less than the average variable cost

2. For a firm in a perfectly competitive market, which of the following is true?

the supply curve is the MC curve above the minimum AVC

C. Its short-run supply curve is the marginal cost curve above the average variable cost curve.

3. If a profit-maximizing, perfectly competitive firm is producing at a point on the marginal cost curve between average variable cost and average total cost, it should do which of the following?

continue to produce as it is able to recover its variable cost in the short run

C. Continue producing in the short run

4. For the perfectly competitive, profit-maximizing firm,

D. P = MR = MC

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is...

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is $15, marginal cost is $9, and average variable cost is $7.50. What should the firm do and why? A. Shut down, because average total cost is greater than price B. Shut down, because of a loss of $5,000 D. Continue to produce, because price is greater than average total cost C. Continue to produce, because price is greater than average variable cost 2. The...

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is...

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is $15, marginal cost is $9, and average variable cost is $7.50. What should the firm do and why? A. Shut down, because average total cost is greater than price B. Shut down, because of a loss of $5,000 C. Continue to produce, because price is greater than average variable cost D. Continue to produce, because price is greater than average total cost 2.The price...

1. Assume the following: sales price is $9, output is 5,000units, average total cost is...

1. Assume the following: sales price is $9, output is 5,000 units, average total cost is $12, marginal cost is $9, and average variable cost is $9.50. What should the firm do and why?]A. Continue to operate and reduce costs to earn a profitB. Shut down because the firm’s earning a loss of $15.00C. Shut down because the price is less than the average variable costD. Continue to produce because price can be increased2. For a firm in a perfectly...

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).

Assume that price equals a rising marginal cost at 50 units of output. At this output,...

Assume that price equals a rising marginal cost at 50 units of output. At this output, total variable cost is $250 and total fixed cost is $300. The product’s price is $6. a. The perfectly competitive firm will maximize profit by producing ______ units of output. b. If this firm shuts down, it will lose ______ dollars.

1. Assume that in one year an economy produces 5,000 units of output and they sell...

1. Assume that in one year an economy produces 5,000 units of output and they sell for $120 a unit, on average. In year 2, the economy produces the same 5,000 units of output, and sells it for $200 a unit, on average. What happened to the nominal GDP and to real GDP between years 1 and 2? Why?

Date Transaction Units In Unit Cost Total Units Sold Sales Price Total 7/1 Balance 100 4.10...

Date Transaction Units In Unit Cost Total Units Sold Sales Price Total 7/1 Balance 100 4.10 410 7/6 Purchase 800 4.20 3,360 7/7 Sale 300 7.00 2,100 7/10 Sale 300 7.30 2,190 7/12 Purchase 400 4.50 1,800 7/15 Sale 200 7.40 1,480 7/18 Purchase 300 4.60 1,380 7/22 Sale 400 7.40 2,960 7/25 Purchase 500 4.58 2,290 7/30 Sale 200 7.50 1,500 Totals 2,100 9,240 1,400 10,230 Compute FIFO, LIFO, Average for the perpetual inventory system. Be sure to do...

Date Transaction Units In Unit Cost Total Units Sold Sales Price Total 7/1 Balance 100 4.10...

Question 1 Output total cost marginal cost fixed cost average cost Total revenue average revenue Marginal...

Question 1 Output total cost marginal cost fixed cost average cost Total revenue average revenue Marginal revenue 0 10 0 1 16 20 2 26 40 3 40 60 4 60 80 5 88 100 6 120 120 A) Complete the missing data on the table B) What is the selling price of a laptop case explain your answer c) What is the profit maximizing level of output for this firm explain your answer d) create a graph using three...

To complete the table you need to know that the Average Total Cost (ATC) of producing 10 units of output is $980 and that the Total Variable Cost (VC) of producing 11 units of output is $10,400.

Answer the following Questions for a Monopoly Firm. Price Quantity Total Revenue (TR) Marginal Revenue (MR) Marginal Cost (MC) Total Cost (TC) Profit $2000 0 ---- ---- $2,000 $1900 1 $600 $1800 2 $3,000 $1700 3 $3,100 $1600 4 $3,200 $1500 5 $300 $1400 6 $4,100 $1300 7 $900 ...

Subjects