What is profit maximization? Graph and explain how this is the best output for the firm
- What is profit maximization? Graph and explain how this is the best output for the firm
Homework Answers
It can mentioned that profit maximization is nothing but deriving the level of output where the profit level of the company is maximum in for instance when you take the example of perfect competition the maximum profit will occur at a point where the marginal revenue is equal to that of marginal cost and since in the perfect competition the price is equal to the marginal revenue the profit-maximizing output is sold at Q in the graph
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What is profit maximization? Graph and explain how this is the
best output for the firm
Using profit maximization, what happens to output as costs rise? The complete answer will show a...
Using profit maximization, what happens to output as costs rise? The complete answer will show a profit maximization graph with an increase in costs.
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold...
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold at price p) using a production function x = A*1941-a-Beß, where lis labor, k is capital, and e is energy (for example, oil or electricity). a) What is the interpretation of A? b) Under what condition(s) does the production function exhibit constant returns to scale? Is it homogeneous? Are the marginal products of inputs increasing, constant, or decreasing? c) Set up the profit maximization...
Explain the profit maximization rule for a monopoly. How is the rule similar and different from...
Explain the profit maximization rule for a monopoly. How is the rule similar and different from that of a perfectly competitive firm? What is the difference in market equilibrium price and quantity for the monopoly compared to the perfectly competitive firm?
248 PROFIT MAXIMIZATION (Ch. 20) 20.1 (0) The short-run production function of a competitive firm...
248 PROFIT MAXIMIZATION (Ch. 20) 20.1 (0) The short-run production function of a competitive firm is given by f(L)62/3, where L is the amount of labor it uses. (For those who do not know calculus-if total output is al, where a and b are constants, and where L is the amount of some factor of production. then the marginal product of L is given by the formula abL- The cost per unit of labor is w-6 and the price per...
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold...
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold at price p) using a production function x = A*/*k1-a8eß, where Iis labor, k is capital, and e is energy (for example, oil or electricity). a) What is the interpretation of A? b) Under what condition(s) does the production function exhibit constant returns to scale? Is it homogeneous? Are the marginal products of inputs increasing, constant, or decreasing? c) Set up the profit maximization...
Based on the level of output being produced, is this firm maximizing profit? What is the dollar...
Based on the level of output being produced, is this firm
maximizing profit? What is the dollar value of the
profit being earned by the firm? Use the lettering on
the graph to identify the area of profit.
How does the demand curve let you know this is a firm operating
in perfect competition?
What is the significance of Point E? Point F?
How much additional cost did the 500thunit add to
total cost? How do you know?
Explain how the market will adjust...
1. [Multi-product Firm’s Profit Maximization] Find (i) the profit maximizing output levels x and y and...
1. [Multi-product Firm’s Profit Maximization] Find (i) the profit maximizing output levels x and y and (ii) the maximum profit for a firm producing two goods x and y with the profit function π(x, y) = 86x−2x2 −2xy−4y2 +120y−200.
4. Short-run profit maximization or loss minimization for a perfectly competitive firm Suppose that the market...
4. Short-run profit maximization or loss minimization for a perfectly competitive firm Suppose that the market for cashmere sweaters is a perfectly competitive market. The following graph shows the daily cost curves of a firm operating in this market. Profit or Loss PRICE AND COST (Dollars per sweater) 0 10 90 100 20 30 40 50 60 70 80 QUANTITY OF OUTPUT (Sweaters) In the short run, at a market price of $80 per sweater, this firm will choose to...
Q1: What are the first and second-order conditions for profit maximization for a firm operating under...
Q1: What are the first and second-order conditions for profit maximization for a firm operating under perfect competition? Give an economic interpretation of both conditions.
MC ATC D AVC C K In the accompanying graph, at what level of output will the firm earn a maximum unit-profit margin (or...
MC ATC D AVC C K In the accompanying graph, at what level of output will the firm earn a maximum unit-profit margin (or profit per unit)? Multiple Choice 0B 0A OK OC
MC ATC D AVC C K In the accompanying graph, at what level of output will the firm earn a maximum unit-profit margin (or profit per unit)? Multiple Choice 0B 0A OK OC
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold at price p) using a production function x = A*1941-a-Beß, where lis labor, k is capital, and e is energy (for example, oil or electricity). a) What is the interpretation of A? b) Under what condition(s) does the production function exhibit constant returns to scale? Is it homogeneous? Are the marginal products of inputs increasing, constant, or decreasing? c) Set up the profit maximization...
248 PROFIT MAXIMIZATION (Ch. 20) 20.1 (0) The short-run production function of a competitive firm is given by f(L)62/3, where L is the amount of labor it uses. (For those who do not know calculus-if total output is al, where a and b are constants, and where L is the amount of some factor of production. then the marginal product of L is given by the formula abL- The cost per unit of labor is w-6 and the price per...
Problem 3 - Profit Maximization Consider the case of a firm that produces output x (sold at price p) using a production function x = A*/*k1-a8eß, where Iis labor, k is capital, and e is energy (for example, oil or electricity). a) What is the interpretation of A? b) Under what condition(s) does the production function exhibit constant returns to scale? Is it homogeneous? Are the marginal products of inputs increasing, constant, or decreasing? c) Set up the profit maximization...
Based on the level of output being produced, is this firm
maximizing profit? What is the dollar value of the
profit being earned by the firm? Use the lettering on
the graph to identify the area of profit.
How does the demand curve let you know this is a firm operating
in perfect competition?
What is the significance of Point E? Point F?
How much additional cost did the 500thunit add to
total cost? How do you know?
Explain how the market will adjust...
4. Short-run profit maximization or loss minimization for a perfectly competitive firm Suppose that the market for cashmere sweaters is a perfectly competitive market. The following graph shows the daily cost curves of a firm operating in this market. Profit or Loss PRICE AND COST (Dollars per sweater) 0 10 90 100 20 30 40 50 60 70 80 QUANTITY OF OUTPUT (Sweaters) In the short run, at a market price of $80 per sweater, this firm will choose to...
MC ATC D AVC C K In the accompanying graph, at what level of output will the firm earn a maximum unit-profit margin (or profit per unit)? Multiple Choice 0B 0A OK OC
MC ATC D AVC C K In the accompanying graph, at what level of output will the firm earn a maximum unit-profit margin (or profit per unit)? Multiple Choice 0B 0A OK OC
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