Homework Answers
a. Minimum price to enter the market is minimum ATC
Minimum ATC = 250
Minimum Price = 250
b.
Profit = (P-ATC)*Q = (400 - 300)* 1000 = 100000
c.
if price is above minimum AVC, airline will produce positive output
Minimum Price = 120
If price falls below this price firm will not be able to recover its variable cost and will shut down
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1. Consider the following cost curve diagram for an airline (MC is marginal cost, AVC is...
$14 $13 MC 1 $12 $11 MC 2 $10 $9 $8 Marginal Cost of Hoodies $7...
$14 $13 MC 1 $12 $11 MC 2 $10 $9 $8 Marginal Cost of Hoodies $7 $6 $5 $4 $3 $2. $1 so $0 0 100 200 300 400 500 600 700 800 900 1000 Quantity of Hoodies The above graph shows two possible marginal cost curves for the production of hoodies (hooded sweatshirts). Assume the market for hoodies is perfectly competitive. If a hoodie industry consists of 20 firms with a marginal cost curve of MC 1 and 10...
D Question 7 1 pts Use the following graph that shows the marginal cost (MC) curve,...
D Question 7 1 pts Use the following graph that shows the marginal cost (MC) curve, the Average Variable Cost (AVC) curve, and the Average Total Cost (ATC) curve. What is the variable cost when the quantity (Q) being produced is 6? P MC ATC /AVC $15 $11 $8 Q O $66 $8 O $15 $11 Question 8 1 pts Use the following graph that shows the marginal cost (MC) curve, the Average Variable Cost (AVC) curve, and the Average...
Question 26 5 pts Price ATC MC AVC DD . m 0 Quantity Refer to the...
Question 26 5 pts Price ATC MC AVC DD . m 0 Quantity Refer to the diagram above. At the point markede, o price is determining production at a level where P = AVC o TR is exactly equal to TC, so profits equal zero. o price is above average cost of production. o the leftover rectangle is the profit earned. Question 28 4 pts The following figure shows the average cost curve, demand curve, and marginal revenue curve for...
The above graph shows two possible marginal cost curves for the production of hoodies (hooded sweatshirts)....
The above graph shows two possible marginal cost curves for the
production of hoodies (hooded sweatshirts). Assume that the hoodie
market is perfectly competitive. If a hoodie industry consists of
10 firms with a marginal cost curve of MC 1 and 20 firms with a
marginal cost curve of MC 2, what is the quantity of hoodies
supplied at a price of $12 per hoodie?
$14 $13 MC 1 $12 $11 MC 2 $10 $9 $8 Marginal Cost of Hoodies...
The following shows the demands and marginal revenue in two markets (D1 and MR1, and D2...
The following shows the demands and marginal revenue in two
markets (D1 and MR1, and D2 and MR2) for a price discriminating
firm along with total demand, DT, marginal revenue, MRT, and
marginal cost MC. As with the PPT slides, you can view the data
generating these lines; for reference,
D1=600–0.5Q
D2=800–0.5Q
MRT=700–0.5Q
DT=700–0.25Q
MC=0.0009Q2–0.5Q+376
The graph shows two sets of demand (D1,D2D1,D2) and marginal
revenue (MR1,MR2MR1,MR2) curves for individual markets 1 and 2,
with quantity on the horizontal axis,...
The curves show the marginal cost (MC), average variable cost (AVC), and average total cost (ATC)...
The curves show the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) functions for a firm in a competitive market. Using the straight-line tool, draw a straight line, all the way from the left edge of the graph to the right edge, to represent the minimum price at which the firm should continue operating.
2. (Figure 8.12) Curve ABCD is the firm's marginal cost (MC) curve. Curve FCH is the...
2. (Figure 8.12) Curve ABCD is the firm's marginal cost (MC) curve. Curve FCH is the firm's average cost (AC) curve. Curve EBG is the firm's average variable cost (AVC) curve. The perfectly competitive firm's short-run supply curve is represented by curve: Price (5) 10- E, B, C, and D. O B, C, and H O A, B, C, and D O B, C, and D
Price/Cost ($) 7) Monopoly II (6 points) The marginal costs (MC), average variable costs (AVC), and...
Price/Cost ($) 7) Monopoly II (6 points) The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopoly are shown in the figure below. The figure also shows the demand curve (D) and the marginal revenue curve (MR) for this market. 501 ATC AVC a. What is the firm's profit-maximizing level of output? Label this on the graph. b. What price will the monopolist charge for that level of output? Label this on the graph....
The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopoly...
The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopoly are shown in the figure below. The figure also shows the demand curve (D) and the marginal revenue curve (MR) for this market. Instructions: Use the tools provided to plot the profit-maximizing quantity (Q), the profit-maximizing price (P), the profit (Profit), and the deadweight loss (DWL). Note that the deadweight loss will be only approximate due to the curvature of the marginal cost curve....
Portia owns and manages a sporting apparel company. Consider the given average cost (AC), average variable...
Portia owns and manages a sporting apparel company. Consider the given average cost (AC), average variable cost (AVC), and marginal cost (MC) curves for track suits. All but the MC curve have been placed incorrectly. Portia knows that the minimum average cost for a track suit is $7 and the minimum of average variable cost is $5. Rearrange the AC and AVC curves so that they are consistent with the marginal cost curve. If the average fixed cost curve is...
$14 $13 MC 1 $12 $11 MC 2 $10 $9 $8 Marginal Cost of Hoodies $7 $6 $5 $4 $3 $2. $1 so $0 0 100 200 300 400 500 600 700 800 900 1000 Quantity of Hoodies The above graph shows two possible marginal cost curves for the production of hoodies (hooded sweatshirts). Assume the market for hoodies is perfectly competitive. If a hoodie industry consists of 20 firms with a marginal cost curve of MC 1 and 10...
D Question 7 1 pts Use the following graph that shows the marginal cost (MC) curve, the Average Variable Cost (AVC) curve, and the Average Total Cost (ATC) curve. What is the variable cost when the quantity (Q) being produced is 6? P MC ATC /AVC $15 $11 $8 Q O $66 $8 O $15 $11 Question 8 1 pts Use the following graph that shows the marginal cost (MC) curve, the Average Variable Cost (AVC) curve, and the Average...
Question 26 5 pts Price ATC MC AVC DD . m 0 Quantity Refer to the diagram above. At the point markede, o price is determining production at a level where P = AVC o TR is exactly equal to TC, so profits equal zero. o price is above average cost of production. o the leftover rectangle is the profit earned. Question 28 4 pts The following figure shows the average cost curve, demand curve, and marginal revenue curve for...
The above graph shows two possible marginal cost curves for the
production of hoodies (hooded sweatshirts). Assume that the hoodie
market is perfectly competitive. If a hoodie industry consists of
10 firms with a marginal cost curve of MC 1 and 20 firms with a
marginal cost curve of MC 2, what is the quantity of hoodies
supplied at a price of $12 per hoodie?
$14 $13 MC 1 $12 $11 MC 2 $10 $9 $8 Marginal Cost of Hoodies...
The following shows the demands and marginal revenue in two
markets (D1 and MR1, and D2 and MR2) for a price discriminating
firm along with total demand, DT, marginal revenue, MRT, and
marginal cost MC. As with the PPT slides, you can view the data
generating these lines; for reference,
D1=600–0.5Q
D2=800–0.5Q
MRT=700–0.5Q
DT=700–0.25Q
MC=0.0009Q2–0.5Q+376
The graph shows two sets of demand (D1,D2D1,D2) and marginal
revenue (MR1,MR2MR1,MR2) curves for individual markets 1 and 2,
with quantity on the horizontal axis,...
The curves show the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) functions for a firm in a competitive market. Using the straight-line tool, draw a straight line, all the way from the left edge of the graph to the right edge, to represent the minimum price at which the firm should continue operating.
2. (Figure 8.12) Curve ABCD is the firm's marginal cost (MC) curve. Curve FCH is the firm's average cost (AC) curve. Curve EBG is the firm's average variable cost (AVC) curve. The perfectly competitive firm's short-run supply curve is represented by curve: Price (5) 10- E, B, C, and D. O B, C, and H O A, B, C, and D O B, C, and D
Price/Cost ($) 7) Monopoly II (6 points) The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopoly are shown in the figure below. The figure also shows the demand curve (D) and the marginal revenue curve (MR) for this market. 501 ATC AVC a. What is the firm's profit-maximizing level of output? Label this on the graph. b. What price will the monopolist charge for that level of output? Label this on the graph....
The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a monopoly are shown in the figure below. The figure also shows the demand curve (D) and the marginal revenue curve (MR) for this market. Instructions: Use the tools provided to plot the profit-maximizing quantity (Q), the profit-maximizing price (P), the profit (Profit), and the deadweight loss (DWL). Note that the deadweight loss will be only approximate due to the curvature of the marginal cost curve....
Portia owns and manages a sporting apparel company. Consider the given average cost (AC), average variable cost (AVC), and marginal cost (MC) curves for track suits. All but the MC curve have been placed incorrectly. Portia knows that the minimum average cost for a track suit is $7 and the minimum of average variable cost is $5. Rearrange the AC and AVC curves so that they are consistent with the marginal cost curve. If the average fixed cost curve is...
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