In: Economics
Utilizing the following Christmas Tree production function that you had completed in Homework 2 that includes output and cost information for a firm, respond to the questions given, assuming the firm is a perfectly competitive firm:
Input (Units of Water) |
Output (Christmas Trees) |
MPP |
TFC |
TVC |
TC |
AFC |
AVC |
ATC |
MC |
0 |
0 |
4500 |
0 |
4500 |
|||||
10 |
70 |
7 |
4500 |
3500 |
8000 |
64.29 |
50.00 |
114.29 |
50.00 |
20 |
145 |
7.5 |
4500 |
7000 |
11500 |
31.03 |
48.28 |
79.31 |
46.67 |
30 |
220 |
7.5 |
4500 |
10500 |
15000 |
20.45 |
47.73 |
68.18 |
46.67 |
40 |
290 |
7 |
4500 |
14000 |
18500 |
15.52 |
48.28 |
63.79 |
50.00 |
50 |
345 |
5.5 |
4500 |
17500 |
22000 |
13.04 |
50.72 |
63.77 |
63.64 |
60 |
395 |
5 |
4500 |
21000 |
25500 |
11.39 |
53.16 |
64.56 |
70.00 |
70 |
440 |
4.5 |
4500 |
24500 |
29000 |
10.23 |
55.68 |
65.91 |
77.78 |
80 |
480 |
4 |
4500 |
28000 |
32500 |
9.38 |
58.33 |
67.71 |
87.50 |
90 |
515 |
3.5 |
4500 |
31500 |
36000 |
8.74 |
61.17 |
69.90 |
100.00 |
100 |
545 |
3 |
4500 |
35000 |
39500 |
8.26 |
64.22 |
72.48 |
116.67 |
Assume that the selling price for Christmas Trees is
$80/tree.What would be the approximate profit maximizing rate of
output that you would want to produce?Would the firm be generating
profit above all costs at that selling price? Why or Why
not?
If the price of Christmas Trees drops to $60/tree, approximately
how many trees would now be produced for the optimum level?Are you
making profit above all costs at $60/tree? Why or Why
not?
At what price would be the short-run breakeven point?At what
price would be the firm’s short-run shut down point?