Question

In: Economics

Suppose that you were part of the management team for the Bedrock Stone Company and the...

Suppose that you were part of the management team for the Bedrock Stone Company and the President of the Firm MR. Slate asked you to determine how much output the company should produce. The Current market price for stone is $5 per ton.

Quantity

Total

Cost

Total Revenue

ATC

AFC

AVC

Marginal

Revenue

Marginal Cost

Short-Run

Profit

0

3

1

5

2

8

3

12

4

17

5

23

6

30

7

38

8

47

A)      What is the profit maximizing level of output?

B)      What is the marginal revenue at that level of output?

C)      Competition has been fierce in the stone business and Mr. Slate has asked you to develop a report indicating in the event that price begins to fall when should he send Barney and Fred home while the company remains idle?

D)      Is Mr. Slate likely to enjoy these profits over the long-run? Why or Why not?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
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