Suppose the wage rate is $10 per hour and the fixed cost is $20. The production...
Suppose the wage rate is $10 per hour and the fixed cost is $20. The production information is as follows:
|
Labor (Hour) |
Output |
|
0 |
0 |
|
1 |
2 |
|
2 |
4 |
|
3 |
6 |
|
4 |
8 |
Suppose the market is perfectly competitive, and the market price is $10.
a.Find out the profit maximizing output level at short run.
b.Specify the amount of economic profit or loss at the profit maximizing output level in the short run.
c.What will be the price and quantity for the long run equilibrium?
Homework Answers
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Suppose the wage rate is $10 per hour and the fixed cost is $20.
The production...
answer a only Output Total cost(dollars per (pizzas per hour) hour) 10 21 Pat's Pizza Kitchen...
answer a only
Output Total cost(dollars per (pizzas per hour) hour) 10 21 Pat's Pizza Kitchen is a price taker in a perfectly competitive market. Its costs are in the table. a. Calculate Pat's profit-maximizing output and economic profit if the market price is (i) $14 a pizza. (ii) $12 a pizza. (iii) $10 a pizza b. What is Pat's shutdown point and what is Pat's economic profit if it shuts down temporarily? c. Derive Pat's supply curve. d. At...
Answer b-e Output Total cost(dollars per (pizzas per hour) hour) 10 21 Pat's Pizza Kitchen is...
Answer b-e
Output Total cost(dollars per (pizzas per hour) hour) 10 21 Pat's Pizza Kitchen is a price taker in a perfectly competitive market. Its costs are in the table. a. Calculate Pat's profit-maximizing output and economic profit if the market price is (i) $14 a pizza. (ii) $12 a pizza. (iii) $10 a pizza b. What is Pat's shutdown point and what is Pat's economic profit if it shuts down temporarily? c. Derive Pat's supply curve. d. At what...
Suppose a monopolist faces the following demand curve: P = 440 – 7Q. The long run marginal cost of production is constant and equal to $20, and there are no fixed costs. A) What is the monopolist’s...
Suppose a monopolist faces the following demand curve: P = 440 – 7Q. The long run marginal cost of production is constant and equal to $20, and there are no fixed costs. A) What is the monopolist’s profit maximizing level of output? B) What price will the profit maximizing monopolist produce? C) How much profit will the monopolist make if she maximizes her profit? D) What would be the value of consumer surplus if the market were perfectly competitive? E)...
Fixed costs are irrelevant in the decision about whether to shut down production in the short...
Fixed costs are irrelevant in the decision about whether to shut down production in the short run because fixed costs: do not affect, and are not affected by, the quantity the firm produces. can be paid off over time. only change when production changes only change in the short run |If a profit-maximizing perfectly competitive firm shuts down in the short run, it incurs no losses. it incurs an economic loss equal to total fixed cost. its profit equals zero....
The following graph shows the daily cost curves of a firm operating in a perfectly competitive...
The following graph shows the daily cost curves of a firm operating in a perfectly competitive market. Suppose the market price for the good is $80 per unit Use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss at the market price of $80 per unit if the firm chooses to produce the profit-maximizing quantity of output Profit or Loss PRICE AND COST (Dollars) QUANTITY (Thousands of units) At the market price of $80...
1. Suppose that a firm operating in perfectly competitive industry has short-run cost function given by...
1. Suppose that a firm operating in perfectly competitive industry has short-run cost function given by C(q) = 5+2q+9. The market price is $10. (a) What is the profit-maximizing output level for this firm? (b) What is the firm's total revenue and profits at the profit-maximizing output? (c) What is the minimum price at which the firm will produce a positive level of output in the short run?
1. Draw two graphs. On the first, show the short-run profit maximizing output of an individual...
1. Draw two graphs. On the first, show the short-run profit maximizing output of an individual firm earning an economic profit, including MR, MC, AVC, and ATC. On the second, show the short-run market equilibrium price and quantity. Explain how the industry supply curve and the market equilibrium price and quantity are determined. 2. What is the relationship between the price on the two graphs? Why does this relationship exist? 3. Explain why a firm in a perfectly competitive industry...
4. A company produces economic analysis reports using hours of labor (L) and computers (K). The...
4. A company produces economic analysis reports using hours of labor (L) and computers (K). The production function is ? = 2?√? Initially, in the short run, they have just 1 computer (K = 1). The wage is $20 per hour, and the cost of capital is $10. a. Derive short run total cost and short run average costs curves, with costs as a function of q. Do these costs curves exhibit economies or diseconomies of scale? Explain. (5) b....
Assume the following cost data are for a purely competitive producer: Average Product Fixed Cost Variable...
Assume the following cost data are for a purely competitive producer: Average Product Fixed Cost Variable Cost Total Cost Average Average Marginal Total Cost $60.00 $45.00 $105,00 $45.00 1 72.50 2 30.00 42.50 40.00 3 20.00 40.00 60.00 35.00 30.00 15.00 37.50 52.50 5 12.00 37.00 49.00 35.00 6 10.00 37.50 47.50 40.00 8.57 7 38.57 47.14 45.00 7.50 40.63 48.13 50.00 55.00 9 6.67 43.33 65.00 10 6.00 46.50 52.50 75.00 Answer the following questions (a - c) using...
Suppose the market for apples is perfectly competitive. The short-run average total cost and marginal cost...
Suppose the market for apples is perfectly competitive. The short-run average total cost and marginal cost MC of growing apples for an individual grower are illustrated in the figure to the right. Assume that the market price for apples is $34.00 per box. What is the profit-maximizing quantity for apple growers to produce?boxes. Enter your response as an integer.) At this level of output, profit will be Enter your response rounded to the nearest dollar.) Apple growers will earn positive...
answer a only
Output Total cost(dollars per (pizzas per hour) hour) 10 21 Pat's Pizza Kitchen is a price taker in a perfectly competitive market. Its costs are in the table. a. Calculate Pat's profit-maximizing output and economic profit if the market price is (i) $14 a pizza. (ii) $12 a pizza. (iii) $10 a pizza b. What is Pat's shutdown point and what is Pat's economic profit if it shuts down temporarily? c. Derive Pat's supply curve. d. At...
Answer b-e
Output Total cost(dollars per (pizzas per hour) hour) 10 21 Pat's Pizza Kitchen is a price taker in a perfectly competitive market. Its costs are in the table. a. Calculate Pat's profit-maximizing output and economic profit if the market price is (i) $14 a pizza. (ii) $12 a pizza. (iii) $10 a pizza b. What is Pat's shutdown point and what is Pat's economic profit if it shuts down temporarily? c. Derive Pat's supply curve. d. At what...
Fixed costs are irrelevant in the decision about whether to shut down production in the short run because fixed costs: do not affect, and are not affected by, the quantity the firm produces. can be paid off over time. only change when production changes only change in the short run |If a profit-maximizing perfectly competitive firm shuts down in the short run, it incurs no losses. it incurs an economic loss equal to total fixed cost. its profit equals zero....
The following graph shows the daily cost curves of a firm operating in a perfectly competitive market. Suppose the market price for the good is $80 per unit Use the blue rectangle (circle symbols) to shade the area representing the firm's profit or loss at the market price of $80 per unit if the firm chooses to produce the profit-maximizing quantity of output Profit or Loss PRICE AND COST (Dollars) QUANTITY (Thousands of units) At the market price of $80...
1. Suppose that a firm operating in perfectly competitive industry has short-run cost function given by C(q) = 5+2q+9. The market price is $10. (a) What is the profit-maximizing output level for this firm? (b) What is the firm's total revenue and profits at the profit-maximizing output? (c) What is the minimum price at which the firm will produce a positive level of output in the short run?
Assume the following cost data are for a purely competitive producer: Average Product Fixed Cost Variable Cost Total Cost Average Average Marginal Total Cost $60.00 $45.00 $105,00 $45.00 1 72.50 2 30.00 42.50 40.00 3 20.00 40.00 60.00 35.00 30.00 15.00 37.50 52.50 5 12.00 37.00 49.00 35.00 6 10.00 37.50 47.50 40.00 8.57 7 38.57 47.14 45.00 7.50 40.63 48.13 50.00 55.00 9 6.67 43.33 65.00 10 6.00 46.50 52.50 75.00 Answer the following questions (a - c) using...
Suppose the market for apples is perfectly competitive. The short-run average total cost and marginal cost MC of growing apples for an individual grower are illustrated in the figure to the right. Assume that the market price for apples is $34.00 per box. What is the profit-maximizing quantity for apple growers to produce?boxes. Enter your response as an integer.) At this level of output, profit will be Enter your response rounded to the nearest dollar.) Apple growers will earn positive...
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