The MC (marginal cost) curve and the ATC (average total cost) curve intersect

Group of answer choices

at the MC curve's maximum point

at the ATC curve's maximum point

at the ATC curve's minimum point

at the MC curve's minimum point

Given the following cost information for company XYZ.

The following table shows a demand schedule facing a monopolist.

Quantity: 0    1   2   3   4   5   6   7   8   9  10

Prices:     25 25 24 23 22 21 20 19 18 17 16

The marginal cost of the production is always 13.00 and the profit maximizing output, average a total cost is $20.00

1. What is the profit maximizing (or loss minimizing) output for this?
2. What is the price at which that output will sell in the market?
3. Compute the total cost
4. Compute the total revenue
5. compute profit or loss at the maximizing output level

8. The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a perfectly competitive firm that produces novelty ear buds in a competitive market. The market price of ear buds is $6.00 per pair.

Instructions: In part a, enter your answer as the closest given whole number.

a. If Buddies wants to maximize its profits, how many pairs of ear buds should it produce?

      pairs

Instructions: In parts b-d, round your answers to 2 decimal places.

b. At the profit-maximizing quantity, what is the total cost of producing ear buds?

     $

c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?

     $

d. If the market price is $5.50 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what is Buddies weekly profit?

     $

e. Buddies earns a normal profit when

marginal cost equals average cost at the minimum of average cost.

marginal cost equals average cost.

marginal cost equals marginal revenue at the minimum of marginal cost.

average cost equals average revenue at the minimum of average cost.

10. If a purely competitive firm shuts down in the short run,

it will realize a loss equal to its total variable costs.

it will realize a loss equal to its explicit costs.

it will realize a loss equal to its total fixed costs.

its loss will be zero.

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children’s mittens in a competitive market.

Smitten's Production Costs

Instructions: In part a, enter your answer as a whole number. In parts b–d, round your answers to two decimal places.

a. If the market price of children’s mittens is $6.00 per pair, how many pairs of children’s mittens should Smitten produce per week to maximize its profits?

     pairs of mittens

b. What is Smitten’s average total cost at the profit-maximizing quantity of children’s mittens?

   $

c. What are Smitten’s weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens?

   $

d. What are Smitten’s weekly profits if the market price is $5.50 per pair and the firm produces the profit-maximizing quantity of mittens?

     $

e. The price at which Smitten would earn a normal profit is where:

• average cost equals average revenue at the minimum of average cost.

• marginal cost equals average cost.

• marginal cost equals average cost at the minimum of average cost.

• marginal cost equals marginal revenue at the minimum of marginal cost.

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children’s mittens in a competitive market.

Smitten's Production Costs

Instructions: In part a, enter your answer as a whole number. In parts b–d, round your answers to two decimal places.

a. If the market price of children’s mittens is $6.00 per pair, how many pairs of children’s mittens should Smitten produce per week to maximize its profits?

________ pairs of mittens

b. What is Smitten’s average total cost at the profit-maximizing quantity of children’s mittens?

   $ ________

c. What are Smitten’s weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens?

   $ ________

d. What are Smitten’s weekly profits if the market price is $5.50 per pair and the firm produces the profit-maximizing quantity of mittens?

     $ ________

e. The price at which Smitten would earn a normal profit is where:

• marginal cost equals average cost.

• marginal cost equals marginal revenue at the minimum of marginal cost.

• marginal cost equals average cost at the minimum of average cost.

• average cost equals average revenue at the minimum of average cost.

Assume the following cost data are for a purely competitive firm:

1. At a product price of $56, will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Explain. What economic profit or loss will the firm realize per unit of output.
2. Answer the relevant questions of (i) assuming product price is $41
3. Answer the relevant questions of (i) assuming product price is $32
4. Which will be the price the company will have to confront in the long run, assuming freedom to entry and exit and identical costs for all players?  (Hint: remember the long-run ATC curve)

Suppose that a given firm has the following total cost and marginal cost functions: C(q) = 50+5q+ 5q 2 , MC(q) = 5+10q. 2

(a) Write down expressions for the fixed cost, average fixed cost, average total cost and average variable cost associated with this production function. In addition, identify the quantity at which average total cost is minimized.

(b) Consider the restaurant industry. Provide an example of a fixed cost, variable cost, and sunk cost. Be sure to justify you answers.

Draw a diagram showing the typical relationship between the Average Total Cost (ATC) and Marginal Cost (MC) curves for a firm.

Long Run Cost

Derive a firm's total cost curve by using a firms isoquants and isocost lines(note:be sure to show what is on the axis,and the values for all points and curves-the correct labeling and spacing of the things is very mportant)for the case where the firm has

a)constant return to scale

b)decreasing return to scale

c)increasing returns to scale

d)For decreasing return to scale ,from the total cost curve,derive the correct long run marginal cost curve and long run average cost curve.