A firm's total cost of producing Q units of output is C (Q) =
200 + 50Q. The inverse demand curve for the firm's product is P(Q)
= 80-Q, where P denotes the price of the product.
a) If the price of the product is set equal to the firm's average,
how much will the firm produce? (5 points) Hint: choose the larger
of the two numbers. Show your work.
b) If the firm is under marginal cost pricing, how many units will
the firm produce? Show your work. (5 points)
In: Economics
The table below contains economic cost information for a
perfect competitor. Use it to answer the questions that follow. Q,
ATC, AVC, and MC = quantity, average total cost, average variable
cost, and marginal cost.
Q | ATC | AVC | MC |
10 | 100.00 | 80.00 | 10 |
11 | 95.45 | 77.27 | 50 |
12 | 93.33 | 76.67 | 70 |
13 | 92.31 | 76.92 | 80 |
14 | 91.79 | 77.50 | 85 |
15 | 91.67 | 78.33 | 90 |
16 | 91.88 | 79.38 | 95 |
17 | 92.35 | 80.59 | 100 |
18 | 93.06 | 81.94 | 105 |
19 | 93.95 | 83.42 | 110 |
20 | 95.25 | 85.25 | 120 |
What quantity maximizes profit when price = $101?
Q = __
What is the maximum profit when price = $101?
Maximum profit = ___
Would the maximum profit increase, decrease, or remain constant
in the long run?
The maximum profit would ____________________.
Why?
Would the firm produce output or shut down in the short run when
price = $84?
The firm would ________________________.
Explain your logic.
In: Economics
A monopolistic competitor produces 100 units of a good at a per-unit cost of $22. If it charges a price of $19 per unit of the good, it will ________.
A. earn zero economic profits in the short run
B. incur a loss of $300 in the short run
C. earn a profit of $1,900 in the short run
D. incur a loss of $100 in the short run
A monopolistically competitive firm makes positive economic profits if ________.
A. price is less than average total cost
B. price is higher than average total cost
C. price equals marginal cost
D. price equals average fixed cost
A monopolistic competitor earns zero economic profits if ________.
A. price is higher than average total cost
B. price is lower than marginal cost
C. price is equal to marginal cost
D. price is equal to average total cost
A monopolistic competitor incurs losses if ________.
A. price is higher than average total cost
B. price is lower than marginal cost
C. price is equal to marginal cost
D. price is lower than average total cost
Firm A charges $8.50 for each unit of Good X. If the average total cost of producing 1,000 units of Good X is $12 and the market for Good X is monopolistically competitive, Firm A ________ by producing 1,000 units of Good X.
A. earns a profit of $3,500
B. earns a profit of $1,000
C. incurs a loss of $1,000
D. incurs a loss of $3,500
Suppose a monopolistic competitor produces 2,000 units of the good in equilibrium and charges a price of $10 for each unit. If the average total cost of producing 2,000 units of the good is $6, what is the total profit earned by the producer?
A. $8,000
B. $4,000
C. $2,000
D. $20,000
In: Economics
An economist estimated that the cost function of a
single-product firm is:
C(Q) = 50 + 30Q + 15Q2 +
10Q3.
Based on this information, determine the following:
a. The fixed cost of producing 10 units of output.
$
b. The variable cost of producing 10 units of output.
$
c. The total cost of producing 10 units of output.
$
d. The average fixed cost of producing 10 units of output.
$
e. The average variable cost of producing 10 units of output.
$
f. The average total cost of producing 10 units of output.
$
g. The marginal cost when Q = 10.
$
In: Economics
A company produces at an output level where marginal cost is
equal to marginal revenue and has the following revenue and cost
levels:
Total revenue = $1,450
Total cost = $1,500
Total variable cost = $1,300
What would you suggest?
| shut down |
| continue to produce because the loss is less than the total fixed cost |
| increase production to lower the marginal cost |
| reduce output to lower the marginal cost |
| raise the price |
In: Economics
A monopolist faces a single market with the following demand curve and total cost
P = 180 – 2.5Q and TC = 2Q2
i. Determine the quantity of output that it should produce and the price it should charge to maximize profit. Then, calculate the profit.
In: Economics
In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of $4.5 million.
In: Finance
A firm produces 20 units of output at a market price
of $5, a marginal cost of $5, and an average cost of $3. the firm's
economic profit is $ _ and the firm _ maxmimizing it's economic
profit
In: Economics
Patty and Ben operate a small company that produces
bicycles. Their fixed cost is $ 4000
per month. They can hire workers for $ 4000 per month. Their
monthly production function for
bicycles is as given in the following table:
Quantity of Labour Quantity of Bicycles
0 0
1 10
2 30
3 60
4 120
5 170
6 200
7 220
8 230
a.) For each quantity of labour calculate the following: total
product (TP), marginal product (MP),
average productivity (AP), average variable cost (AVC), average
fixed cost (AFC), average total
cost (ATC), and marginal cost (MC).
b.) On one diagram draw the MP and AP
c.) On one diagram draw the AVC, ATC, and MC
d.) At what point does Patty and Ben experience decreasing marginal
productivity? At what level of are ATC minimized?
In: Economics
Suppose that a company has estimated the average variable cost of producing its product to be $10. The firm’s total fixed cost is $100,000. If the company produces 1,000 units and its pricing strategy is to add a 35 percent markup, what price would the company charge?
In: Economics