A monopolist faces a demand of P = -3Q + 400. The monopolist’s marginal cost is MC = 2Q + 80. The total cost for the monopolist is TC = Q2 + 80Q + 6000
a) Find the profit-maximizing quantity, price, and profit of the monopolist.
b) A regulatory agency tries to force the monopoly to produce the same quantity as a competitive firm. Show what this price and quantity is and why the firm will eventually shut down rather than submit to this regulation.
In: Economics
Consider the following cost information for a firm that operates in a perfectly competitive market.
Q (quantity of output) | Total cost ($) |
0 | 6 |
2 | 26 |
4 | 36 |
6 | 50 |
8 | 68 |
10 | 90 |
12 | 118 |
(1) Suppose that the market price is $9. Find the quantity of output that the firm should produce in the short run.
(2) Suppose that the market price drops from $9 to $7. Find the quantity of output that the firm should produce in the short run.
In: Economics
|
Output |
Total cost (dollars) |
|
0 |
20,000 |
|
1 |
20,100 |
|
2 |
20,300 |
|
3 |
20,700 |
|
4 |
21,200 |
|
5 |
21,800 |
|
Output |
Total fixed cost |
Total variable cost |
Average total cost |
Average fixed cost |
Average variable cost (dollars) |
|
0 |
500 |
____ |
____ |
____ |
____ |
|
1 |
____ |
20 |
____ |
____ |
____ |
|
2 |
____ |
____ |
300 |
____ |
____ |
|
3 |
____ |
____ |
____ |
____ |
133.33 |
|
4 |
____ |
1,100 |
____ |
____ |
____ |
In: Economics
Which of the following lists of items is used to compute the cost of goods available for sale?
a.Sales, beginning inventory, and ending inventory b.Gross profit, beginning inventory, and ending inventory c.Beginning inventory and ending inventory d.Net sales, beginning inventory, and ending inventory e.Delivered cost of purchases and beginning inventory
In: Accounting
Identify and describe three (3) alternatives to Historical Cost Accounting (HCA). In your description, outline the underlying assumptions of each alternative and provide examples of how each method could be applied in practice. Critically evaluate whether any of these alternatives represent a viable alternative to historical cost accounting.
In: Accounting
A firm in a competitive industry has the following total and marginal cost functions: ? = ?? + ?? + ?? ?? = ? + ?? Suppose that the current market price is $20 and the firm is producing 8 units of output.
a. Is the firm maximizing profit? If not, at what quantity should the firm produce in order to maximize profits?
b. Write down the following cost functions for this firm: i. Variable Cost ii. Fixed Cost iii. Average Cost iv. Average Variable Cost v. Average Fixed Cost
c. Graph AC, MC and AVC on a single graph for values of ? between ? ?? ??. You can use Excel.
d. At what output level is AC minimized (this can be a non-integer)?
e. At what range of prices will the profit-maximizing firm produce a positive level of output ? > ??
f. At what range of prices will the profit-maximizing firm earn positive profits?
g. At what range of prices will the profit-maximizing firm earn negative profits?
In: Economics
In: Economics
Assume that the cost data in the following table are for a purely competitive producer:
| Total Product |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
| 0 | ||||
| 1 | $60.00 | $45.00 | $105.00 | $45.00 |
| 2 | 30.00 | 42.50 | 72.50 | 40.00 |
| 3 | 20.00 | 40.00 | 60.00 | 35.00 |
| 4 | 15.00 | 37.50 | 52.50 | 30.00 |
| 5 | 12.00 | 37.00 | 49.00 | 35.00 |
| 6 | 10.00 | 37.50 | 47.50 | 40.00 |
| 7 | 8.57 | 38.57 | 47.14 | 45.00 |
| 8 | 7.50 | 40.63 | 48.13 | 55.00 |
| 9 | 6.67 | 43.33 | 50.00 | 65.00 |
| 10 | 6.00 | 46.50 | 52.50 | 75.00 |
Instructions: If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers. Select "Not applicable" and enter a value of "0" for output if the firm does not produce.
a. At a product price of $68.00
(ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? units per firm =
(iii) What economic profit or loss will the firm realize per unit of output? Loss/Profit per unit = $
b. At a product price of $43.00
(ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? = units per firm
(iii) What economic profit or loss will the firm realize per unit of output? Loss/Profit per unit = $
c. At a product price of $34.00
(ii) If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? units per firm =
(iii) What economic profit or loss will the firm realize per unit of output? profit/loss per unit = $
Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers.
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).
| (1) | (2) | (3) | (4) |
|---|---|---|---|
| Price | quantity supplied, single firm | Profit or loss | Quantity Supplied, 1,500 firms |
| $29 | $0.00 | -60 | 0.00 |
| 24 | 0.00 | -60 | 0.00 |
| 34 | ? | ? | ? |
| 41 | 6.00 | ? | 9,000 |
| 46 | 7.00 | -8 | 10,500 |
| 57 | 8.00 | ? | 12,000 |
| 68 | 9.00 | ? | 13,500 |
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:
| Price | Total Quality Demanded |
| $24.00 | 17,000 |
| 29.00 | 15,000 |
| 34.00 | 13,500 |
| 41.00 | 12,000 |
| 46.00 | 10,500 |
| 51.00 | 9,500 |
| 56.00 | 8,000 |
What is the equilibrium price? $
Instructions: Enter your answers rounded to two decimal places. Enter positive values for profit or loss.
What will profit or loss be per unit? (Profit or Loss) per unit =
Per firm? $
Will this industry expand or contract in the long run? (Expand or Contract)
In: Economics
1. As the quantity produced goes to infinity, the average variable cost curve will
(a) go to zero. (b) stay constant. (c) approach the average total cost curve. (d) None of the above answers are correct.
2. In our model of a competitive firm’s problem, the firm wants to
(a) maximize revenue by choosing quantity. (b) maximize profit by choosing quantity. (c) minimize cost by choosing quantity. (d) maximize profit by choosing market price.
3. Suppose you must pay a $40 fee for a license to sell stuffed animals. This fee is a
(a) variable cost. (b) fixed cost. (c) strategy. (d) supply function.
4. Which of the following are assumptions about a perfectly competitive market? Select all that apply.
(a) firms have no price-setting power (b) firms can’t vary the amount of capital they use (c) firms sell identical products (d) firms have constant economies of scale
5. Suppose a firm doubles its output and its costs more than double. We would say that this firm displays
(a) economies of scale (b) diseconomies of scale (c) constant economies of scale (d) increasing returns to scale
In: Economics
Using the following table of costs for a firm, what is the marginal cost of producing the 3rd unit?
Using the following table of costs, what is the firm's average total cost at 2 units of output?
| Q | Fixed Costs | Total Variable Costs |
| 1 | 200 | 50 |
| 2 | 200 | 100 |
| 3 | 200 | 175 |
| 4 | 200 | 275 |
In: Economics