Suppose a producer in the (perfectly competitive) market for
golf balls has the following total cost
and marginal cost functions, and that market price is $10.
T C = 50 + 0.1q
2
MC = 0.2q
(a) [5 pts] What is the firm’s fixed cost?
(b) [5 pts] Write the equation for the firm’s average total costs.
(c) [5 pts] What is the firm’s marginal revenue?
(d) [15 pts] Graph the market and the firm (making sure to
illustrate marginal cost, marginal
revenue, average total cost and average variable cost). Should the
firm continue to produce in the short run?
In: Economics
A competitive firm faces a market price of $15. The firm has a total cost function equal to TC(q) = 30 + 5q + q2 . What quantity does the firm produce? What are its profits? Will the firm shut down in the short run? Explain.
In: Economics
Assume that the following cost data are for a purely competitive producer:
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| (a) At a product price of $66.00 |
(b) At a product price of $41.00 |
(c) At a product price of $32.00 |
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| Will this firm produce in the short run? | (Click to select) No Yes | (Click to select) Yes No | (Click to select) Yes No |
|
If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? |
(Click to select) Not
applicable Profit-maximizing Loss-minimizing |
(Click to
select) Profit-maximizing Not
applicable Loss-minimizing |
(Click to
select) Profit-maximizing Loss-minimizing Not
applicable |
| What economic profit or loss will the firm realize per unit of output? |
(Click to
select) Loss Not
applicable Profit |
(Click to select) Not
applicable Loss Profit |
(Click to select) Total
profit Total loss |
d. In the table below, complete the short-run supply schedule for
the firm (columns 1 and 2) and indicate the profit or loss incurred
at each output (column 3).
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e. Now assume that there are 1,500 identical firms in this
competitive industry; that is, there are 1,500 firms, each of which
has the cost data shown in the table. Complete the industry supply
schedule (column 4 in the table above).
f. Suppose the market demand data for the product are as
follows:
|
What will be the equilibrium price? $ .
What will be the equilibrium output for the
industry? .
For each firm? units.
Instructions: Round your answers to 2 decimal
places. Enter positive values for profit or loss.
What will profit or loss be per unit?
Will this industry expand or contract in the long run?
In: Economics
Assume that a firm wants to maximise profits, using a diagram (with marginal cost, average total cost and average variable cost curves), explain the decisions a firm will make to maximise profits in the short run and indicate the profit/loss on the diagram when the price is:
(a) Greater than the minimum average total cost.
(b) Less than the minimum average variable cost.
(c) Less than the minimum average total cost but greater than the average variable cost.
In: Economics
Table 13-14
Quantity |
|
|
| Average | Average | Average |
|
1 | $23 | $33 | |||||
2 | $38 | ||||||
3 | $60 | ||||||
4 | $54 | ||||||
5 | $80 | ||||||
6 | $88 | ||||||
7 | $113 | ||||||
8 | $155 |
Refer to Table 13-14. What is the total cost of producing 7 units of output?
| a.$10 |
| b.$143 |
| c.$123 |
| d.$185 |
In: Economics
16. Total profit for a firm is calculated as
|
a. |
(price minus average cost) times quantity of output. |
|
b. |
total revenue minus total cost. |
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c. |
Both a and b. |
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d. |
None of the above. |
17. In the short run, if the price is less than average variable cost, a firm operating in a competitive market will
|
a. |
shutdown. |
|
b. |
exit. |
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c. |
increase the price. |
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d. |
increase the quantity. |
18. When a restaurant stays open for lunch service even though few customers patronize the restaurant for lunch, which of the following principles is (are) best demonstrated?
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(i) |
Fixed costs are sunk in the short run. |
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(ii) |
In the short run, only variable costs are important to the decision to stay open for lunch. |
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(iii) |
If revenue exceeds variable cost, the restaurant owner is making a smart decision to remain open for lunch. |
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a. |
(i) and (ii) only |
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b. |
(ii) and (iii) only |
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c. |
(i) and (iii) only |
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d. |
(i), (ii), and (iii) |
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19. In the long run, a firm will enter a competitive industry if
|
a. |
total revenue exceeds total cost. |
|
b. |
the price exceeds average variable cost. |
|
c. |
the firm can earn accounting profits. |
|
d. |
All of the above are correct. |
20. Which of the following statements is not correct?
|
a. |
Both a competitive firm and a monopolist maximize profits at an output where marginal cost equals marginal revenue. |
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b. |
Both a competitive firm and a monopolist use discriminatory pricing. |
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c. |
A competitive firm is a price taker. |
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d. |
A monopolist is a price maker. |
In: Economics
A perfectly competitive firm has a total revenue function of TR = 90Q and cost function of TC = 30Q2 + 50.
i. Determine the price the firm should charge and the quantity of output that it should produce to maximize profit.
ii. if there are 20 identical firms in the market, what will be the perfectly competitive price and total output produced?
In: Economics
Find the EOQ, the total annual cost associated with the economic order quantity, the reorder point, number of orders per year and the time between orders.
|
Annual Demand |
15,600 units |
|
Weeks Operating |
52 weeks/year |
|
Set up Cost |
$60/order |
|
Holding rate |
20% |
|
Unit cost |
$80 /unit |
|
Lead-Time |
5 weeks |
In: Finance
If price is less than a perfectly competitive firm's average total cost,
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the firm will continue to produce if price is greater than average variable cost. |
||
|
the firm will shut down. |
||
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the firm will exit the industry in the short run. |
||
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the firm will continue to produce as long as price is greater than average fixed cost. |
In: Economics
4. This is the data for a perfectly competitive producer.
Output Total Cost
0 100
5 110
10 130
15 170
20 220
25 290
30 380
35 490
A) How much will this firm produce when the price is $ 8? Why?
B) How much profit or loss will he make?
C)The firm comes to you for advice. Should he shut down? YES? NO? What are you basing your decision on?
5. Based on the data in question 4 what will be the price in the long run in this market? Show with a graph on how the market and producers will reach it.
In: Economics