A firm is operating in the short run. Here is some of the information about the firm's operation.
Production Function |
|
Labor |
Daily Output |
1 |
60 |
2 |
130 |
3 |
200 |
4 |
260 |
5 |
310 |
6 |
320 |
7 |
325 |
8 |
326 |
Variable Resources |
Output |
MP |
TFC |
TVC |
TC |
MC |
ATC |
AFC |
AVC |
0 |
0 |
50 |
0 |
50 |
|||||
1 |
60 |
60 |
50 |
120 |
170 |
2 |
2.83 |
.83 |
2 |
2 |
130 |
70 |
50 |
240 |
290 |
1.71 |
2.23 |
.38 |
1.85 |
3 |
200 |
70 |
50 |
360 |
410 |
1.71 |
2.05 |
.25 |
1.8 |
4 |
260 |
60 |
50 |
480 |
530 |
2 |
2.04 |
.19 |
1.85 |
5 |
310 |
50 |
50 |
600 |
650 |
2.4 |
2.10 |
.16 |
1.94 |
6 |
320 |
10 |
50 |
720 |
770 |
12 |
2.41 |
.16 |
2.25 |
7 |
325 |
5 |
50 |
840 |
890 |
24 |
2.73 |
.15 |
2.58 |
8 |
326 |
1 |
50 |
960 |
1010 |
120 |
3.1 |
.15 |
2.94 |
Using the chart , answer the question.
If the firm is in profit maximizing mode and facing a market price of $2.35, at what output listed on the chart should it produce? Why should it produce at that level?
Ans: If the firm is in profit maximizing mode and facing a market price of $2.35, it should produce 260 units of output. Because the profit maximizing condition is where price equals marginal cost or price is greater than marginal cost ( P = MC ) or ( P > MC) . If the firm produces beyond this level then the profit will start to decline.
Explanation:
Variable Resources |
Output | MP | TFC | TVC | TC | MC | ATC | AFC | AVC | TR | MR | Profit |
0 | 0 | --- | 50 | 0 | 50 | --- | --- | --- | --- | 0 | --- | -50 |
1 | 60 | 60 | 50 | 120 | 170 | 2 | 2.83 | 0.83 | 2 | 141 | 2.35 | -29 |
2 | 130 | 70 | 50 | 240 | 290 | 1.71 | 2.23 | 0.38 | 1.85 | 305.5 | 2.35 | 15.5 |
3 | 200 | 70 | 50 | 360 | 410 | 1.71 | 2.05 | 0.25 | 1.80 | 470 | 2.35 | 60 |
4 | 260 | 60 | 50 | 480 | 530 | 2.00 | 2.04 | 0.19 | 1.85 | 611 | 2.35 | 81 |
5 | 310 | 50 | 50 | 600 | 650 | 2.40 | 2.10 | 0.16 | 1.94 | 728.5 | 2.35 | 78.5 |
6 | 320 | 10 | 50 | 720 | 770 | 12 | 2.41 | 0.16 | 2.25 | 752 | 2.35 | -18 |
7 | 325 | 5 | 50 | 840 | 890 | 24 | 2.74 | 0.15 | 2.58 | 763.75 | 2.35 | -126.25 |
8 | 326 | 1 | 50 | 960 | 1010 | 120 | 3.10 | 0.15 | 2.94 | 766.1 | 2.35 | -243.9 |
A firm is operating in the short run. Here is some of the information about the...
A firm is operating in the short run. Here is some of the information about the firm's operation. The short run fixed costs for the firm are $50. The wage rate for each employee is $120 per day The Production Function is below Production Function Labor Daily Output 1 60 2 130 3 200 4 260 5 310 6 320 7 325 8 326 Variable Resources Output MP TFC TVC TC MC ATC AFC AVC 0 0 50 0 50...
A firm is operating in the short run. Here is some of the information about the firm's operation. The short run fixed costs for the firm are $50. The wage rate for each employee is $120 per day The Production Function is below Production Function Labor Daily Output 1 60 2 130 3 200 4 260 5 310 6 320 7 325 8 326 Variable Resources Output MP TFC TVC TC MC ATC AFC AVC 0 0 50 0 50...
Variable Resources Output MP TFC TVC TC MC ATC AFC AVC TR MR Profit 0 0 50 0 50 0 -50 1 60 60 50 120 170 2 2.83 0.83 2 141 2.35 -29 2 130 70 50 240 290 1.71 2.23 0.38 1.85 305.5 2.35 15.5 3 200 70 50 360 410 1.71 2.05 0.25 1.80 470 2.35 60 4 260 60 50 480 530 2.00 2.04 0.19 1.85 611 2.35 81 5 310 50 50 600 650 2.40...
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Complete the following short-run cost table using the information provided. Total product TFC AFC TVC AVC TC MC 0 0.0 1 3.0 2 5.0 5.0 3 9.0 7. (10 points) Answer the questions below on the basis of the above graph. (a) (3 points-1 point for short run; 1 point for long run; 1 point for how you can tell) How can you tell if these cost curves are for the short run or the long run? (b) (7 points)...
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SHORT ANSWER QUESTIONS 1. Given the following information about a firm's costs, complete the following chart 12 Output TFC TVC TC AFC AVC ATC MC 0100 0100 000 10 100 100 200 0 10 2010 150 250 1.50 ISO 250 3.33 12.508.33 2.5 10.00 100 500 100 2 10.00 60 Too 750 850 1.67 12.50 1100 . 1.43 16.43 80 100 1280 11.25 16.00 90 100 1720 1. Tiod 2.000 20.00 70 20.00 +2