Suppose the price of a good is $100. Suppose when a particular firm producing this good produces...

Suppose the price of a good is $100. Suppose when a particular firm producing this good produces 1000 units a week, its average cost is $90. This firm operates in a competitive market and therefore, can sell whatever quantity it wants to sell at this price. What profit would this firm be making each week?

Is the answer $10000?

Solutions

Expert Solution

Yes

===

Profit =(P-ATC)*Q

P=100 and ATC=90, Q=1000

Profit=(100-90)*1000

=10000

the profit is $10000

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

A firm produces a good q and receives a price p = 10 for the good....

A firm produces a good q and receives a price p = 10 for the good. The marginal private cost of producing the good is MC = 2q. The production of each unit causes marginal external damage of 2 monetary units. a) Without regulation, how many units does the firm produce? b) How many units does the firm produce if it is liable for its damage? c) What are the efficiency gains from implementing liability laws if the implementation has...

A firm produces a good q and receives a price p = 10 for the good....

A firm produces a good q and receives a price p = 10 for the good. The marginal private cost of producing the good is MC = 2q. The production of each unit causes marginal external damage of 2 monetary units. What are the efficiency gains from implementing liability laws if the implementation has no cost?

A firm produces a good q and receives a price p = 10 for the good....

A firm produces a good q and receives a price p = 10 for the good. The marginal private cost of producing the good is MC = 2q. The production of each unit causes marginal external damage of 2 monetary units. Instead of a tax, the government subsidizes production with 2 monetary units per unit of production. How high is the efficiency loss of production with subsidies compared to the socially efficient production level?

1. A firm produces 100 units of good A at a total cost of $1,500and...

1. A firm produces 100 units of good A at a total cost of $1,500 and separately 200 units of good B at a cost of $2,000. By combining the production of A and B, it is possible to produce the same quantities of A and B respectively at a combined total cost of $2,238. Compute the economies of scope experienced by this firm.Hint: Write your answer to two decimal places.2. Suppose we are given a profit function Q =...

3) Suppose that you work for a firm that produces a particular kind of widget. In...

3) Suppose that you work for a firm that produces a particular kind of widget. In the past, assembly-line workers were compensated according to a piece rate scheme in which they were paid according to the number of pieces that moved through their station in a shift. Unfortunately, under this scheme, the costs of reworking poorly assembled pieces increased considerably. In a meeting, a colleague proposes changing to a scheme in which every worker on a line is paid according...

• When a seller decides to change his price for a particular good, will quantity demanded...

• When a seller decides to change his price for a particular good, will quantity demanded change drastically? And what will happen to the total revenue, will it increase or fall? •Will individuals form teams or firms in all settings? •Economic profit is usually lower than accounting profit. A firm that makes zero economic profit is said to be earning normal profit. Is zero economic profit bad for a firm? •Discuss the difference between monopolistic competition and oligopoly. •What makes...

A monopolistic firm is currently producing 3,500 units of output; price is $100, marginal revenue is...

A monopolistic firm is currently producing 3,500 units of output; price is $100, marginal revenue is $7, average total cost is $5.50, marginal cost is $4.50, and average variable cost is $3.75. The firm should a. raise price because the firm is losing money. b. keep the price the same because the firm is producing at minimum average variable cost. c. raise price because the last unit of output decreased profit by $5.50. d. lower price because the next unit...

Suppose we have linear supply and demand functions for a good. At the price of 100...

Suppose we have linear supply and demand functions for a good. At the price of 100 euros the requested quantity is 25 units of the good while the offered quantity is 50 units. When the price changes from 100 euros and comes to equilibrium the demand elasticity is -3 and the supply elasticity is 1. 1.Explain the signs of elasticity 2.Find the supply and demand functions 3.Find the price and quantity balance

How to find the efficient Scale of a firm producing a good?

The buyer's reservation price for a particular good or service is the:

The buyer's reservation price for a particular good or service is the: Multiple Choice price the buyer must pay to ensure he or she gets it. smallest price the buyer would be willing to pay for itsame as the market price. largest price the buyer would be willing to pay for it.

Subjects