A firm currently faces a market price of $7. If producing output where MC= $7, it would produce 11 units of output. At this level of output, AVC is $7.50 and ATC is $10.25. Which of the following statements is true? a) If the firm produces, it loses $30.25. If the firm shuts down, it loses $35.75. The firm should shut down. b) If the firm produces, it loses $35.75. If the firm shuts down, it loses $30.25. The firm should shut down. c) If the firm produces, it loses $35.75. If the firm shuts down, it loses $30.25. The firm should produce. d) If the firm produces, it loses $30.25. If the firm shuts down, it loses $35.75. The firm should produce.
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- Your minimum AVC will determine if you should continue to produce or shut down. 17. If market price is below minimum AVC firms should 18. If market price is greater than or equal to minimum AVC firms shouldKaren's cookie shop tries to maximize its profit by producing 800 cookies a day. Due to health guidelines in place for the Covid-19 pandemic, she has to purchase additional cleaning stuff and the fixed costs increase and the market price remains constant, then the short run profit-maximizing level of output per day is less than 800 cookies. becomes zero. is more than 800 cookies. is still 800 cookies.Assume the market for a good is perfectly competitive and the market equilibrium price is $5.00. The profit maximizing output is 200. At this output level, the AVC = $3.00 and ATC = $6.00. %D %3D a. Should the firm keep producing in the short run? b. What are profits or losses in either scenario? Suppose the market price of a good is $20 and TC=0.5Q2. What Q should a profit maximizing perfectly competitive firm choose? What are profits? Suppose that the long run TC function is as follows: TC=1000+10Q² (and total cost is 0 if Q is less than 0). If the going price in the industry is $300, is the market in long run equilibrium? If not, what will the long run equilibrium price be? Show the adjustment using an industry and individual firm graph.
- The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. If the average revenue falls to RM3 per unit, calculate the firm’s new profit or loss at the equilibrium. Based on your answer, should the firm continue or stop the production? Justify. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5 7 6.0Suppose that over the short run (say the next 5 years), demand for OPEC oil is given by P = 165 – 2.5q. Here q is measured in millions of barrels a day. OPEC marginal cost per barrel is $15. What is OPEC’s optimal level of production? What is the prevailing price of oil at that level? Many experts contend that maximizing short-run profit is counterproductive for OPEC in the long run because high price reduces buyers to conserve energy and spur competition and new exploration that increases the overall supply of oil. Suppose that the demand curve just described will remain unchanged only if oil prices stabilize at $65 per barrel or below. If oil price exceeds this threshold, long run demand (over a second five year-period) will be curtailed to P = 135 – 2.5q. OPEC seeks to maximize its total profit over the next decade. What is the optimum output and price policy? (assume all values are present values)Suppose the short run market price a competitive firm faces is Birr 9 and the total cost of the firm is: TC = 200 + Q + 0.02Q 2 . Answer the questions that follow. (A) Calculate the short run equilibrium output and profit of the firm. (B) Derive the MC, ATC, and AVC and calculate the values at the short run equilibrium output. (C) Calculate the producers’ surplus at the equilibrium output. (D) Find the output level that will make the profit of the firm zero.
- Suppose you are a perfectly competitive firm producing computer memory chips. Your production capacity is 1000 units pe r year. Your marginal cost is P10 per chip up to capacity. You have a fixed cost of P10,000 if production is positive and P0 if you shut down. What are your profit-maximizing levels of production and profit if the market price is (A) P5 per chip, (B), P15 per chip, and (C) P25 per chip? For case (B), explain why production is positive even though profits are negative.The Canadian canola industry is perfectly competitive with identical farms exhibiting the long-run cost function Clal = 8a - 4g +q. The market demand curve for canola is given as OP(P) = 64 - P. The long-run equilibrium price and the quantity of canola are given as %3D Select one: A. (8,56). B. (4,56). C. (8,52). D. (4,60). E. (2,64).A profit - maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, average total cost of $8, and fixed cost of $ 200. Complete the following table by indicating the firm's profit, marginal cost, and average variable cost. Profit Marginal Cost Average Variable Cost (Dollars) (Dollars) (Dollars) The efficient scale of the firm must beless than 100 units.
- A profit-maximising firm in a competitive market is currently producing 1,000units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000.a) What is its profit?b) What is its marginal cost?c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?A firm in a competitive market has the following cost structure: Output Total Cost 0 $5 1 $10 2 $12 3 $15 4 $24 5 $40 This is a multiple-choice question, it asked 'If the market price is $4, what will this firm do?'. I answered 'It will shut down in the short run and exit in the long run.' but the correct answer is 'It will produce 3 units in the short run and exit in the long run.' I do not understand how they got that answer by looking at the cost structure. Thank you for your time!Alpha, a company is selling in a perfectly competitive market. Its output is 100 units which sells for $4 each. At this level of output, total cost is $500, total fixed cost is $110, and marginal cost is constant at $4. In the short run, the firm should Group of answer choices reduce output to about 40 units reduce output to about 80 units continue to produce 100 units produce zero units of output There is not enough information to tel