2. (54 points) Short-run costs. Suppose w 1, r 10 and K 20. C )q3 +200 a) (5 points) We have TC = WG) q3 + rK = On one graph (with q on the horizontal axis), graph the Total Cost, Variable Cost, and...
3.[2 points) A firm's short-run total cost is TC = 10,100 + 7, 700Q-100Q2 +Q3/3, and its marginal cost is MC = 7, 700-200Q+Q2. What is the firm's shutdown price? A) $45 B) $200 C) $1,100 D) $18 4.[2 points) Cravats inc., which sells bags designed by famous people, faces a demand curve of Q = 150 - 0.2P, where Q is measured in hundreds of bags and P is the price per bag. The marginal cost of production is...
You have collected the following data on output and total variable costs: Q TVC ($) 10 72,800 20 124,400 30 159,600 40 183,200 50 200,000 60 214,800 70 232,400 80 257,600 90 295,200 100 350,000 Identify the range of output exhibiting increasing returns (increasing MP), and the range exhibiting diminishing returns (decreasing MP). Current fixed costs for the company equal $207,500. Draw two graphs, both with Q on the horizontal axis: one graph shows TVC and TC, and the other...
You have collected the following data on output and total variable costs Q TVC ($) 10 72,800 20 124,400 30 159,600 40 183,200 50 200,000 60 214,800 70 232,400 80 257,600 90 295,200 100 350,000 a. Identify the range LF output exhibiting increasing returns (increasing MP), and the range exhibiting diminishing returns (decreasing MP). b. Current fixed costs for the company equal $207,500. Draw two graphs, both with Q on the horizontal axis: one graph shows TVC and TC, and...
Part III. Graphing the perfectly competitive model (20 points). Use one graphing paper only for the graph. Attach the graphing paper with this completed questionnaire upon submission. All answers should be handwritten. Given: Selling price P=60 Total cost TC = 128 +69 Q-14 Q2 +Q? 1. Average cost equation AC= 2. Marginal cost equation MC = 3. Fill in the blanks in the table. You should be able to show that at the optimum rate of output, Q*, the profit...
The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curve that has two distinct parts. One part, not shown, lies along the vertical axis (quantity = 0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to draw it.
5. Profit maximization and shutting down in the short run Suppose that the market for black leather purses is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per purse) + MC AVC 0 10 90 100 20 30 40 50 60 70 80 QUANTITY (Thousands of purses) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or...
7. Assume that the long-run production function can be expressed as Q-SKL? Where Q is quantity of output, K is the quantity of capital and L is the quantity of labor. If capital is fixed at 10 units in the short run then the short-run production function is: Q=10KL b. Q=50KL? Q=10L? d. 0=50L Q=500KL 8. For a linear total cost function: a. MC will be downward sloping b. MC = AVC c. AVC is upward sloping and linear d....
Consider a perfectly competitive market for shirts. The following graph shows the dally cost curves of a firm operating in this market. PRICE, COST (Dollars per shirt 20 Profit or Loss MC 16 ATC 12 AVC 6 12 18 24 30 36 QUANTITY OF OUTPUTIThousands of shirts per dayl Help Clear AIL In the short run, at a market price of $18 per shirt, this firm will choose to produce 27.00 shirts per day On the previous graph, use the...
4. Profit maximization in the cost-curve diagram Aa Aa Consider a perfectly competitive market for teddy bears. The following graph shows the daily cost curves of a firm operating in this market. PRICE (Dollars per bear) 20 Profit or Loss MC 16 ATC 12 AVC 8 4 010 20 30 40 50 60 OUTPUT (Thousands of bears) Help Clear ALL In the short run, at a market price of $18 per bear, this firm will choose to produce bears per...
competitive firm is the . 4. the vert Mive is atroduction. The short-run supply curve of ortion of its short-tun marginal cost curve that is competitive firm in the above its average variable cost curve, The o ward sloping an u petitive firm is the portion of its short-run marginal cost curve that supply curve of a Leuward-sloping and lies above its long-run average cost curve. Example: A firm has the long-run cost function cy) = 2y + 200 for...