Briefly discuss average costs, including how they are calculated, how they are typically appear on a graph, and what they relate to profitability.
Q: You are given the following cost data: The total fixed costs are $100. (Photo) If the price of…
A: Total cost: It means the actual cost incurred in the production of a given level of output.
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A: Average variable cost refers to the per-unit total variable cost i.e. AVC = TC/Q
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-Briefly discuss average costs, including how they are calculated, how they are typically appear on a graph, and what they relate to profitability.
-Briefly explain what is meant by the term "fixed costs" and provide three examples of same. What determines a firm's level of fixed costs?
-Briefly explain what is meant by the term "variable costs" and provide three examples of same.
-Briefly explain how the total revenue for a profit-seeking firm is determined.
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- You are given the following cost data:The total fixed costs are $100.(Photo)If the price of output is $15, how many units of output will this firm produce? What is total revenue? What is total cost? Briefly explain using the concept of marginal cost. What do you think the firm is likely to do in the short run? In the long run? Select one:a. Profit maximizing Quantity=3b. Profit maximizing Quantity=1c. Profit maximizing Quantity=0d. Profit maximizing Quantity=6Notes for graph: MC is marginal cost, MR is marginal revenue, ATC is average total cost, AVC is average variable cost and D is the demand curve. To maximize the profit, how many units should the firm produce? At what price? Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost? Will you operate this firm in the short run? Long run? Briefly explain.Using the attached graph to answer the following questions: Notes: MC is marginal cost, MR is marginal revenue, ATC is the average total cost, AVC is the average variable cost, and D is the demand curve. Based on your answer, what is the total revenue? Total costs? Total profit? Total fixed cost? Will you operate this firm in the short run? Long run? Briefly explain.
- Related to the Economics in Practice on page 195: If firms have long-run average cost curves with a long, flat section, larger firms have a cost advantage over smaller firms. the optimal number of firms in the industry is one. their long run supply curves are downward sloping. it is impossible to predict the size of the firm.Suppose Felix runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Felix's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Felix produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 0 1 ● ^ 2 O ☐ A ☐ A 3 4 5 QUANTITY (Frying pans) O ☐ 6 Total Cost ☐ 7 8 o Total Revenue Profit ? image 1 Calculate Felix's marginal revenue and marginal cost for the first seven frying pans he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost at each quantity.QUESTION 17 Use the following table and use your previous calculations: find the quantity where ATC is at a minimum and find the quantity that is the most efficient operating point for the firm. Total Output Total Cost TFC TVC AFC AVC ATC MC 0 $20 10 $40 20 $60 30 $90 40 $120 50 $180 60 $280 a. MC = ATC between 30 and 40 Quantity ATC at minimum between 20 and 40 Quantity b. MC = ATC at 30 Quantity ATC at minimum between 20 and 40 Quantity c. MC = ATC at 40 Quantity ATC at minimum between 20 and 40 Quantity d. MC = ATC between 30 and 40 Quantity ATC at minimum between30 and 40 Quantity e. MC = ATC between 20 and 40 Quantity ATC at minimum between 20 and 40 Quantity
- Suppose Larry runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Larry's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Larry produces, including zero shirts. 125 100 TOTAL COST AND REVENUE (Dollars) 25 ☐ Total Cost ☐ -50 0 1 2 3 4 5 6 7 8 QUANTITY (Shirts) Total Revenue A Profit (?) Calculate Larry's marginal revenue and marginal cost for the first seven shirts he produces and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost. 25 2 COSTS AND REVENUE (Dollars per shirt) 0 1 2 3 5 6 7 8 QUANTITY (Shirts) Marginal Revenue Marginal Cost Larry's profit is maximized when he produces is shirts. When he does this, the marginal cost of the previous shirt he…Suppose Sophia sells flowers in a perfectly competitive market and always maximizes profit. (a) Given the current market price is $5, Sophia sells 2000 flowers every week and makes zero profit. What are the amounts of marginal revenue, marginal cost and average total cost at this level of output? Briefly explain. (b) Continued from (a), if the market demand decreases, what will be the short-run impact on Sophia’s profit? Explain in detail with diagrams.Please answer all parts: How does fixed cost affect marginal cost? Do fixed costs affect perfectly competitive firm’s output decisions in the short run? Briefly explain your answer. Are there fixed costs in the long run? Do fixed costs affect perfectly competitive firm’s output decisions in the long run? Explain your answers briefly.
- Delvin has a hot dog stand in a busy midtown area with similar stands on every block. The graph above shows the cost curves of Delvin’s Hot Dogs. The market price of a hot dog is $3. Answer the questions below and show all calculations where necessary. From the diagram, what is Delvin’s profit-maximizing output per day? Explain your answer. Calculate Delvin’s accounting profit per day. How will Delvin’s price and profit change in the long-run, assuming no change in technology or demand?Suppose Hubert runs a small business that manufactures shirts. Assume that the market for shirts is a price-taker market, and the market price is $10 per shirt. The following graph shows Hubert's total cost curve. Use the blue points (circle symbol) to plot total revenue, and the green points (triangle symbol) to plot profit for the first seven shirts that Hubert produces, including zero shirts. TOTAL COST AND REVENUE (Dollars) 125 100 75 50 25 -25 -50 0 0 1 2 ☐ ■ U 3 4 5 QUANTITY (Shirts) L 6 Total Cost 7 8 Total Revenue Profit ? Calculate Hubert's marginal revenue and marginal cost for the first seven shirts he produces, and plot them on the following graph. Use the blue points (circle symbol) to plot marginal revenue and the orange points (square symbol) to plot marginal cost."In the short run, even when output is zero, the firm still has some variable costs it must pay." Is the statement correct or incorrect? Briefly explain your answer.