Q9. A perfectly competitive firm operates in the short-run with labor as its only variable factor....
Q9. A perfectly competitive firm operates in the short-run with
labor as its only variable factor. Its production function
is:
Q = -L3 + 10L2 + 88L
where Q is output per week measured in tons and L is the number of
workers employed. The weekly wage is $324 and the product sells for
$3.24 per ton.
(a) At what weekly output is marginal cost equal to
average variable cost?
(b) What is the minimum product price at which the
firm will operate in the short-run?
(c) How many workers should the firm employ to
maximize profits?
(d) Calculate the firm's point elasticity of demand
for labor at the equilibrium in (c) above.
Homework Answers
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Q9. A perfectly competitive firm operates in the short-run with
labor as its only variable factor....
Which of the following is true with respect to a perfectly competitive firm? It will make...
Which of the following is true with respect to a perfectly competitive firm? It will make small economic profits always or go out of business A perfectly competitive firm has a perfectly inelastic demand curve At profit maximization the perfectly competitive firm operates where total revenue is maximized as well The perfectly competitive firms supply curve is its marginal cost curve above AVC All of the above are true with respect to a perfectly competitive firm Question 5 1 pts...
Question 2. Consider a perfectly competitive firm maximizing profits in the short run. It uses on...
Question 2. Consider a perfectly competitive firm maximizing profits in the short run. It uses only one variable input and the associated cost functions have the usual shape. The following information is given: (i.) the marginal product of labor is 10. (ii.) the firm is making zero profits. (ii.) the average total cost is 6. (iv.) the average product of labor is either 8 or 12. Use this information to answer the following questions. lustrate your answers with a diagram...
P10. A perfectly competitive firm has the following fixed and variable costs in the short run....
P10. A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm's product is $150. a. Complete the table. Output FC VC TC MCTR MR Profit/ Loss $100 100 100 100 100 440 100 $0 100 180 300 600 6100750 b. At what output rate does the firm maximize profit or minimize loss? c. What is the firm's marginal revenue at each positive level of output? Its average d What...
cardboard boxes are produced in a perfectly competitive market. each identical firm has a short run...
cardboard boxes are produced in a perfectly
competitive market. each identical firm has a short run total cost
curve of TC= 3Q^3 - 12Q^2 +16Q + 100, where Q is measured in
thousands of boxes per week. calculate the output for the price
below which a firm in the market will not produce any output in the
short run. ( i.e., the output for the shut down price)
a 2^1/2
b. 2
c. 1/2
d. 1/square root of 2
2)...
5. Short-run supply and long-run equilibrium Consider the perfectly competitive market for steel. Assume that, regardless...
5. Short-run supply and long-run equilibrium Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per ton) + MC D AVC 0 10 90 100 20 30 40 50 60 70 80 QUANTITY (Thousands of tons) The following diagram shows the...
You are the manager of Everyday Tomatoes; hence your firm operates in a perfectly competitive market....
You are the manager of Everyday Tomatoes; hence your firm operates in a perfectly competitive market. The price in your market is $30 (per bushel). Your total cost curve is: C(Q) = 600 + 3Q2 (Q is 1 bushels). What level of output should you produce in the short run? What price should you charge in the short run? Will you make any profits in the short run? What will happen in the long run?
2. A firm operates in a perfectly competitive industry. Suppose it has a short run total...
2. A firm operates in a perfectly competitive industry. Suppose it has a short run total cost function given by TC= 10000 +0.04q?. If the market price is 56, the firm's profit-maximizing quantity is?
A firm operates in a perfectly competitive industry. Suppose it has a short run total cost...
A firm operates in a perfectly competitive industry. Suppose it has a short run total cost function given by TC = 1200 + 2Q + 0.03Q2. If the market price is $38, what is the firm’s profit maximizing quantity?
In the short run, a perfectly competitive firm produces output using capital services (a fixed input)...
In the short run, a perfectly competitive firm produces output using capital services (a fixed input) and labour services (a variable input). At its profit-maximizing level of output, the marginal product of labour is equal to the average product of labour. a. What is the relationship between this firm's average variable cost and its marginal cost? O Average variable cost is higher than marginal cost O Average variable cost equals marginal cost O Average variable cost is less than marginal...
The loss of a perfectly competitive firm which shuts down in the short run: Multiple Choice...
The loss of a perfectly competitive firm which shuts down in the short run: Multiple Choice O is equal to its total variable costs. O O ь is zero. гето. O is equal to its total fixed costs. cannot be determined. Refer to the diagrams, which show the demand and cost curves for a perfectly competitive firm producing output and the demand and supply curve for the industry in which it operates. Which of the following is correct? ATC AVC...
Which of the following is true with respect to a perfectly competitive firm? It will make small economic profits always or go out of business A perfectly competitive firm has a perfectly inelastic demand curve At profit maximization the perfectly competitive firm operates where total revenue is maximized as well The perfectly competitive firms supply curve is its marginal cost curve above AVC All of the above are true with respect to a perfectly competitive firm Question 5 1 pts...
Question 2. Consider a perfectly competitive firm maximizing profits in the short run. It uses only one variable input and the associated cost functions have the usual shape. The following information is given: (i.) the marginal product of labor is 10. (ii.) the firm is making zero profits. (ii.) the average total cost is 6. (iv.) the average product of labor is either 8 or 12. Use this information to answer the following questions. lustrate your answers with a diagram...
P10. A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm's product is $150. a. Complete the table. Output FC VC TC MCTR MR Profit/ Loss $100 100 100 100 100 440 100 $0 100 180 300 600 6100750 b. At what output rate does the firm maximize profit or minimize loss? c. What is the firm's marginal revenue at each positive level of output? Its average d What...
cardboard boxes are produced in a perfectly
competitive market. each identical firm has a short run total cost
curve of TC= 3Q^3 - 12Q^2 +16Q + 100, where Q is measured in
thousands of boxes per week. calculate the output for the price
below which a firm in the market will not produce any output in the
short run. ( i.e., the output for the shut down price)
a 2^1/2
b. 2
c. 1/2
d. 1/square root of 2
2)...
5. Short-run supply and long-run equilibrium Consider the perfectly competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per ton) + MC D AVC 0 10 90 100 20 30 40 50 60 70 80 QUANTITY (Thousands of tons) The following diagram shows the...
2. A firm operates in a perfectly competitive industry. Suppose it has a short run total cost function given by TC= 10000 +0.04q?. If the market price is 56, the firm's profit-maximizing quantity is?
In the short run, a perfectly competitive firm produces output using capital services (a fixed input) and labour services (a variable input). At its profit-maximizing level of output, the marginal product of labour is equal to the average product of labour. a. What is the relationship between this firm's average variable cost and its marginal cost? O Average variable cost is higher than marginal cost O Average variable cost equals marginal cost O Average variable cost is less than marginal...
The loss of a perfectly competitive firm which shuts down in the short run: Multiple Choice O is equal to its total variable costs. O O ь is zero. гето. O is equal to its total fixed costs. cannot be determined. Refer to the diagrams, which show the demand and cost curves for a perfectly competitive firm producing output and the demand and supply curve for the industry in which it operates. Which of the following is correct? ATC AVC...
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