Homework Answers
Answer
Option 1
Keep operating in the short run but shut down in the long run
A firm in the market produces at P=MC if P>AVC
and 150>125
also, the firm produces at MC=ATC=P in the long run but in the long
run MC=ATC >P so the firm will exit the market in the long
run.
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Serenity owns a factory that makes and sell microwaves. The market price of microwaves is $150...
Page 22 of 2 Question 22 (1 point) Serenity owns a factory that makes and sell...
Page 22 of 2 Question 22 (1 point) Serenity owns a factory that makes and sell microwaves. The market price of microwaves is $150 per microwave. At the factory's profit maximizing level of outpu the average variable cost to produce microwaves is $175 and the average total cost is $200. What should Serenity do to maximize her profit? Shut down in the short run and the long run Keep operating in both the short and long run Keep operating in...
4. Suppose a factory produces inter-lock paving blocks for sale, which requires a building and a...
4. Suppose a factory produces inter-lock paving blocks for sale, which requires a building and a machine that produces blocks. A firm rents a building for Rs. 50,000 per month and rents a machine for Rs. 30,000 a month. Those are his fixed costs. His variable cost per month is given in the table below. Quantity of Blocks Variable cost (Rs.) 0 1000 5000 2000 8000 3000 10000 4000 14000 5000 19000 6000 27000 7000 40000 8000 60000 9000 90000...
Question 13 1 pts You run a ginger beer factory. Market research suggests a price of...
Question 13 1 pts You run a ginger beer factory. Market research suggests a price of $8/bottle will produce the highest revenue. You run production with this level of operating leverage. B: Fixed cost - 500 per month, Variable cost = $2/bottle Now, a new competing firm enters the market, pricing their ginger beer at $4 per bottle. You can sell as much as you like at that price but can no longer sell any at the higher price what...
COSTS (Dollars) 8 a88 + EmoK(LH14 6. Deriving the short-run supply curve Consider the competitive market...
COSTS (Dollars) 8 a88 + EmoK(LH14 6. Deriving the short-run supply curve Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry 100 90 70 60 ATC 50 40 30 20 AVC For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit....
Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost RU 91 96 Suppose the local...
Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost RU 91 96 Suppose the local government imposes a $26 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $15.) A Comcast should produce 6 units in the short run and shut down in the long run O B. Comcast should shut down in the short run and in the long run. OC Comcast should shut down in the short run and produce 6 units...
Consider the competitive market for dress shirts. The following graph shows the marginal cost (MC), average...
Consider the competitive market for dress shirts. The following
graph shows the marginal cost (MC), average total cost (ATC), and
average variable cost (AVC) curves for a typical firm in the
industry.
On the following graph, use the orange points (square
symbol) to plot points along the portion of the
firm's short-run supply curve that corresponds to
prices where there is positive output. (Note: You
are given more points to plot than you need.)
At the current short-run market price,...
Question 4: Novotel Lotus provides catered meals, and the catered meals industry is perfectly competitive. Novotel...
Question 4: Novotel Lotus provides catered meals, and the catered meals industry is perfectly competitive. Novotel Lotus machinery costs $100 per day and is the only fixed input. The firm's variable cost consists of the wages paid to the cooks and the food ingredients. The variable cost per day associated with each level of output is given in the accompanying table. Quantity of meals VC TC MC AVC ATC $200 $300 $480 $700 $1000 4.1. Calculate the total cost, the...
2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is...
2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is S20,000 per month. a) Should this firm produce or shut down in the short run? Explain. Should it stay in the industry or exit in the long run? Explain. b) Suppose instead that this business has a fixed cost of S35,000 per month. Should it produce or shut down in the short run? Explain. Should it stay in the industry or exit in the...
QUESTION 21 Assume a competitive firm faces a market price of $90. The total cost of...
QUESTION 21 Assume a competitive firm faces a market price of $90. The total cost of the firm is given by 1 Q3 +9Q+ 1250. c- Which of the following is true in the short-run situation? [Hint: First calculate the profit-maximizing quantity and price, and then calculate the profit. If t O The firm makes profit of more than $500 O The firm makes a loss of $764 and should shut down OThe firm breaks even he firm makes a...
Firms in a competitive market can sell as much as they like at a market price...
Firms in a competitive market can sell as much as they like at a market price of $16. The cost function for each firm is TC = 50 + 4Q + 2Q^2 The associated marginal cost function is MC = 4 + 4Q and the point of minimum average cost is Q = 5. Using the profit maximizing rule, find the short-run profit at the profit maximizing quantity.
Page 22 of 2 Question 22 (1 point) Serenity owns a factory that makes and sell microwaves. The market price of microwaves is $150 per microwave. At the factory's profit maximizing level of outpu the average variable cost to produce microwaves is $175 and the average total cost is $200. What should Serenity do to maximize her profit? Shut down in the short run and the long run Keep operating in both the short and long run Keep operating in...
4. Suppose a factory produces inter-lock paving blocks for sale, which requires a building and a machine that produces blocks. A firm rents a building for Rs. 50,000 per month and rents a machine for Rs. 30,000 a month. Those are his fixed costs. His variable cost per month is given in the table below. Quantity of Blocks Variable cost (Rs.) 0 1000 5000 2000 8000 3000 10000 4000 14000 5000 19000 6000 27000 7000 40000 8000 60000 9000 90000...
Question 13 1 pts You run a ginger beer factory. Market research suggests a price of $8/bottle will produce the highest revenue. You run production with this level of operating leverage. B: Fixed cost - 500 per month, Variable cost = $2/bottle Now, a new competing firm enters the market, pricing their ginger beer at $4 per bottle. You can sell as much as you like at that price but can no longer sell any at the higher price what...
COSTS (Dollars) 8 a88 + EmoK(LH14 6. Deriving the short-run supply curve Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry 100 90 70 60 ATC 50 40 30 20 AVC For each price in the following table, use the graph to determine the number of jackets this firm would produce in order to maximize its profit....
Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost RU 91 96 Suppose the local government imposes a $26 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $15.) A Comcast should produce 6 units in the short run and shut down in the long run O B. Comcast should shut down in the short run and in the long run. OC Comcast should shut down in the short run and produce 6 units...
Consider the competitive market for dress shirts. The following
graph shows the marginal cost (MC), average total cost (ATC), and
average variable cost (AVC) curves for a typical firm in the
industry.
On the following graph, use the orange points (square
symbol) to plot points along the portion of the
firm's short-run supply curve that corresponds to
prices where there is positive output. (Note: You
are given more points to plot than you need.)
At the current short-run market price,...
Question 4: Novotel Lotus provides catered meals, and the catered meals industry is perfectly competitive. Novotel Lotus machinery costs $100 per day and is the only fixed input. The firm's variable cost consists of the wages paid to the cooks and the food ingredients. The variable cost per day associated with each level of output is given in the accompanying table. Quantity of meals VC TC MC AVC ATC $200 $300 $480 $700 $1000 4.1. Calculate the total cost, the...
2. A profit-maximizing business incurs an economic loss of S30,000 per month. Its fixed cost is S20,000 per month. a) Should this firm produce or shut down in the short run? Explain. Should it stay in the industry or exit in the long run? Explain. b) Suppose instead that this business has a fixed cost of S35,000 per month. Should it produce or shut down in the short run? Explain. Should it stay in the industry or exit in the...
QUESTION 21 Assume a competitive firm faces a market price of $90. The total cost of the firm is given by 1 Q3 +9Q+ 1250. c- Which of the following is true in the short-run situation? [Hint: First calculate the profit-maximizing quantity and price, and then calculate the profit. If t O The firm makes profit of more than $500 O The firm makes a loss of $764 and should shut down OThe firm breaks even he firm makes a...
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