Question
In: Economics
4. Suppose that a perfectly competitive firm has the following total variable costs (TVC): Quantity: 0...
4. Suppose that a perfectly competitive firm has the following total variable costs (TVC):
Quantity: 0 1 2 3 4 5 6 7 8
TVC: $0 $20 $58 $74 $88 $106 $128 $152 $178
It also has total fixed costs (TFC) of $50. If the market price is $18 per unit: a. Find the firm’s profit-maximizing quantity using the marginal revenue and marginal cost approach. b. Is the firm earning a positive profit, suffering a loss, or breaking even?
Solutions
Expert Solution
Equilibrium
Quantity=5
Profit=TR-TC (at equilibrium price and quantity)
Profit=90-156
Since TR<TC,the firm is incurring loss.
Loss=66
Rahul Sunny answered 2 years agoRelated Solutions
The firm's demand is as follows: Total variable costs are: Price Quantity Quantity TVC $18 2...
The firm's demand is as follows:
Total variable costs are:
Price
Quantity
Quantity
TVC
$18
2
2
$15
16
3
3
21
15
4
4
27
14
5
5
32
13
6
6
37
12
7
7
44
10
8
8
52
Fixed costs are $15
at all quantities
1. What is the Marginal Revenue at a quantity of 5?
2, What is the Marginal Cost at a quantity of 7?
3. Using the MR-MC rule, what is the profit...
The firm's demand is as follows: Total variable costs are: Price Quantity Quantity TVC $18 2...
The firm's demand is as follows:
Total variable costs are:
Price
Quantity
Quantity
TVC
$18
2
2
$15
16
3
3
21
15
4
4
27
14
5
5
32
13
6
6
37
12
7
7
44
10
8
8
52
Fixed costs are $15
at all quantities
1. What is the Marginal Revenue at a quantity of 5?
2, What is the Marginal Cost at a quantity of 7?
3. Using the MR-MC rule, what is the profit...
The firm's demand is as follows: Total variable costs are: Price Quantity Quantity TVC $18 2...
The firm's demand is as follows:
Total variable costs are:
Price
Quantity
Quantity
TVC
$18
2
2
$15
16
3
3
21
15
4
4
27
14
5
5
32
13
6
6
37
12
7
7
44
10
8
8
52
Fixed costs are $15
at all quantities
QUESTION 1
What is the Marginal Revenue at a quantity of 5?
QUESTION 2
What is the Marginal Cost at a quantity of 7?
QUESTION 3
Using the MR-MC rule, what...
Suppose that you manage a firm in a perfectly competitive market that has the following costs...
Suppose that you manage a firm in a perfectly competitive market
that has the following costs of production:
Quantity
Total Cost
0
$5
1
$8
2
$10
3
$13
4
$18
5
$24
6
$32
7
$42
8
$53
9
$66
10
$81
If the market price is $6, how many units should you produce to
maximize profit?
Consider a perfectly competitive firm with total costs ?? = ? + ?? + ??2 a)...
Consider a perfectly competitive firm with total costs
?? = ? + ?? + ??2
a) Identify the fixed cost ??, and the variable cost of this
firm, ??(?). (Each of them is just a part of the total cost.)
b) Find the average cost ??(?), and the marginal cost ??(?).
c) Long-run supply. Find the minimum of the ??(?) curve, which
constitutes the “shut- down price” in a long-run setting. Use this
“shut-down price” to describe the firm’s long-run...
Consider a perfectly competitive firm with total costs ?? = ? + ?? + ?? 2...
Consider a perfectly competitive firm with total costs ?? = ? +
?? + ?? 2 a) Identify the fixed cost ??, and the variable cost of
this firm, ??(?). (Each of them is just a part of the total cost.)
b) Find the average cost ??(?), and the marginal cost ??(?). c)
Long-run supply. Find the minimum of the ??(?) curve, which
constitutes the “shutdown price” in a long-run setting. Use this
“shut-down price” to describe the firm’s long-run...
Consider a perfectly competitive firm with total costs ?? = ? + ?? + ?? ^2...
Consider a perfectly competitive firm with total costs ?? = ? +
?? + ?? ^2
a) Identify the fixed cost ??, and the variable cost of this
firm, ??(?). (Each of them is just a part of the total cost.)
b) Find the average cost ??(?), and the marginal cost ??(?).
c) Long-run supply. Find the minimum of the ??(?) curve, which
constitutes the “shutdown price” in a long-run setting. Use this
“shut-down price” to describe the firm’s long-run...
Suppose in the short run a perfectly competitive firm has variable cost = 3q2, and MC...
Suppose in the short run a perfectly competitive firm has
variable cost = 3q2, and MC = 6q where q is the quantity
of output produced. Also, the firm has fixed cost F = 10,000.
a) If the market price of the product is 360, how much output
should the firm produce in order to maximize profit?
b) How much profit will this firm make?
c) Given your answer to b), what will happen to the market price
as we...
Suppose in the short run a perfectly competitive firm has FC =$675 and Variable Cost...
Suppose in the short run a perfectly competitive firm has FC =
$675 and Variable Cost = 3q2 where q is the firm’s
quantity of output. Therefore its marginal cost is MC = 6q. If the
market price is P = $120, how much profit will this firm earn if it
maximizes its profit?
A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $150.
A perfectly competitive
firm has the following fixed and variable costs in the short run.
The market price for the firm’s product is $150.Complete the table.OutputFCVCTCMCTRMRProfit/Loss0$100$01100100210018031003004100440 5100600 6100780 At what output rate does the firm maximize profit or
minimize loss?What is the firm’s marginal revenue at each positive
level of output? Its average revenue?What can you say about the relationship between marginal
revenue and marginal cost for output rates below the profit
–maximizing (or loss minimizing) rate? For output rates above the
profit...
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