Question

In: Economics

The table below shows the short-run production and cost schedule of a blueberry farm that operates...

The table below shows the short-run production and cost schedule of a blueberry farm that operates in a perfectly competitive market. Suppose that the prevailing market price is $4 per pack.

Quantity	Total Cost
0	$80
10	$112
20	$132
30	$148
40	$166
50	$188
60	$214
70	$246
80	$286
90	$346
100	$426

(a) What is the fixed cost?

(b) What is the marginal revenue?

(c) What is the marginal cost when the farm increase its production quantity from 60 to 70?

(d) Suppose that the farm produces 50 packs of blueberry. What is the farm's profit?

(e) Find the profit-maximizing quantity and obtain the maximum profit.

Expert Solution

Fixed cost does not vary with the change in the output.

VC=TC-FC

ATC=TC/Q

AVC=TVC/Q

MC=TCn-TCn-1

TC=TFC+TVC

Fixed cost=$80

b.

MR will be equal to price and so MR is $4.

c.

Marginal cost is the addition in total variable cost due to producing an extra unit of output. It means when an additional unit of output is produced and there is an addition in the total variable cost, then this additional cost is called marginal cost.

Hence when output increase from 60 units to 70 units, then MC is $3.

d.

when farm produces 50 packs of blueberry,

TR=4*50

=200

TC=188

Profit=TR-TC

=200-188

=$12

e.

profit-maximizing condition of perfectly competitive firm is

P=MC

Corresponding to this condition quantity is $80 units and profit is $34.

Rahul Sunny answered 2 years ago

Production/Cost Exercises 1. The following is a short-run production table for a firm with labor as...

Production/Cost Exercises 1. The following is a short-run production table for a firm with labor as its only variable input. Wage = $ 200 Capital = 100 units Capital Price= $40 Product Price= $120 Labor Output 0 0 1 50 2 110 3 160 4 200 5 230 6 250 7 260 8 265 9 260 10 250 a. Determine the following measures at all levels of output: MPL, APL, TFC, TVC, TC, TR, AVC, ATC, AFC, MC, PROFIT b....

The table above shows the production and cost schedule for producing t-shirts. Each worker is paid...

The table above shows the production and cost schedule for producing t-shirts. Each worker is paid $250 per day and the total fixed cost of capital is $1000. T-shirts can be sold at a local store for $15. Workers Quantity of Production Fixed Cost Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Marginal Cost Total Cost 0 0 1 20 2 60 3 140 4 200 5 240 6 260 7 268 8 272 Use this information...

The table below shows the average cost of a firm depending on the level of production....

The table below shows the average cost of a firm depending on the level of production. Q 0 1 2 3 4 5 6 AC -- 32 24 20 24 25 26 Assuming that the company is operating in the long run what are fixed costs?

The following table shows the short-run cost data of a perfectly competitive firm. Assume that output...

The following table shows the short-run cost data of a perfectly competitive firm. Assume that output can only be increased in batches of 100 units. Quantity Total Cost (dollars) Variable Cost (dollars) 0 $1000 $0 100 1360 360 200 1560 560 300 1960 960 400 2760 1760 500 4000 3000 600 5800 4800 a. Explain how a firm chooses quantity to maximise profit in a competitive market. b. What is the firm’s fixed cost? (1 mark) c. Suppose...

Sebastian Muffler, Inc. operates an automobile service facility. The table below shows the cost incurred during...

Sebastian Muffler, Inc. operates an automobile service facility. The table below shows the cost incurred during a month when 400 mufflers were replaced. Number of Muffler Replacements 300 400 500 Total costs: Fixed costs A $ 8,700 C Variable costs B 4,000 D Total costs E $ 12,700 F Cost per muffler replacement: Fixed cost G H I Variable cost J K L Total cost per muffler replacement M N O Required: Fill in the missing amounts, labeled A through...

The table above shows a perfectly competitive firm's widget production and cost schedule. Suppose that the prevailing market price is $6.

Quantity (Q)Total Cost (TC)Average Total Cost (ATC)Marginal Cost (MC)0$9----1$102$123$154$195$246$307$49The table above shows a perfectly competitive firm's widget production and cost schedule. Suppose that the prevailing market price is $6.(a) Fill in the blanks of the table above.(b) Find the profit-maximizing quantity using the condition MR = MC.(c) Calculate the maximum profit using the following formula: Profit =(P − ATC)×Q

The following table represents a demand schedule for farm workers.

The following table represents a demand schedule for farm workers.Wage/hrNumber of workers/acre hired$102846648210a. (10 points) On a fully-labeled graph, draw the demand curve for labor. Explain what the graph shows as if you were presenting it to a farm owner.b. (10 points) Suppose the current wage rate for farm workers is $4/hr. Calculate the elasticity of demand using the table above and the point-slope formula. Explain what this value of elasticity means as if you were presenting it to a...

Table 1 below shows the schedule of demand and supply in the Market for Michigan wine....

Table 1 below shows the schedule of demand and supply in the Market for Michigan wine. Use this table to answer the following questions. Table 1 - Demand & Supply in the Market for Michigan Wine Market Price (P ) Quantity Demanded (Qd ) Quantity Supplied (Qs ) $0 150 0 $10 125 50 $20 100 100 $30 75 150 $40 50 200 $50 25 250 $60 0 300 Explain why a price of $40 cannot be an equilibrium price...

Explain the relationship between a firm’s short-run production function and its short-run cost function. Focus on...

Explain the relationship between a firm’s short-run production function and its short-run cost function. Focus on the marginal product of an input and the marginal cost of production. (p. 283 #3

Once an airline publishes its schedule, the short run marginal cost of an additional passenger is...

Once an airline publishes its schedule, the short run marginal cost of an additional passenger is very low. Explain why the operation of revenue management systems may set some ticket prices below that needed to cover fully-allocated cost.