For the above table what quantity would the firm produce if price was (Use our class rules, including the profit maximizing rule, the shut-down rule, etc.): a) $6 b) $1 c) $2 Quantity of avocados 0 10 20 30 40 50 60 70 80 Total Costs 10 30 40 60 90 130 180 240 310 For the above table what quantity would the firm produce if price was (Use our class rules, including the profit maximizing rule, the shut-down rule, etc.): a) $6 b) $1 c) $2
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- Based on your answers to the WipeOut Ski Company in Exercise 7.3, now imagine a situation where the firm produces a quantity of 5 units that it sells for a price of 25 each. What will be the companys profits or losses? How can you tell at a glance whether the company is making or losing money at this price by looking at average cost? At the given quantity and price, is the marginal unit produced adding to profits?100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars)Tips ips The following graph plots daily cost curves for a firm operating in the competitive market for instant pots. 100 PRICE (Dollars per instant pot) 8888 2 2 2 2 10 o ATC AVC MC ㅁㅁ 0 5 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of instant pots) Using the following table, for each price level, calculate the optimal quantity of units for the firm to produce. Using the data from the graph to determine the firm's total variable cost, calculate the profit or loss associated with producing that quantity. Assume that if the firm is indifferent between producing and shutting down, it will choose to produce. (Hint: Select purple points [diamond symbols] on the graph to receive exact average variable cost information.) Price (Dollars per instant pot) Quantity (Instant pots) Total Revenue (Dollars) Fixed Cost (Dollars) Variable Cost (Dollars) Profit (Dollars) 25.00 1,600,000 70.00 1,600,000 100.00 1,600,000 If the firm shuts down, it must incur its fixed costs (FC) in the short run. In…
- Principles of Microeconomics Name: Homework #3 Prof. R. Harris DUE: Wednesday, April 17, 2019 at the beginning of class - NO EXCEPTIONS. Please remember to show all work and please be neat. Please staple this if you print it on your own. 1. Consider the following table of numbers, which represents demand and cost conditions for a com firm. petitive TR 600 0 1 2 $o $400 600 $400 $240 600 $430 $670 $960 $1,350 $1,840 $2,440 $3,120 $3,910 $4,800 600 600 600 600 600 600 5 6 7 600 600 9 10 (a) Fill in the missing values (b) Use the information in the chart to determine what level of output the firm should produce. Explain your reasoning.Problem 2: Average total cost, from “Principles of Economics” by N. Gregory MankiwYou are the chief financial officer for a firm that sells gaming consoles. Your firm has thefollowing average-total-cost schedule:Quantity | Average total cost600 $300601 $301Your current level of production is 600 consoles, all of which have been sold. Someone calls, desperateto buy one of your consoles. The caller offers you $550 for it. Should you accept the offer? Why or whynot?Suppose that the market for frying pans is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of that point. 100 80 Profit or Loss 70 ATC 60 50 40 20 AVC 20 MC 10 10 12 QUANT TY Thousands of pans per dey 140 45 32 PRICE (Dollars per pan) 品 导
- Attempts: Average: 12 5. Profit maximization and shutting down in the short run Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. V ATC AVC PRICE (Dolars per watch) 100 5 MO 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY(Thousands of watches) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) Price Quantity (Dollars per watch) (Watches) 25.00 40.00 65.00 Total Revenue Fixed Cost Variable Cost (Dollars) (Dollars) (Dollars) 520,000 $20,000 520,000 (Dollars) If the firm shuts down,…Consider the competitive market for sports jackets. The following graph shows the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves for a typical firm in the industry. 72 16 AVC 16 24 40 QUANTITY (Thousards of jaats) For each price in the following tabie, use the graph to determine the number of jackets this firm would produce in arder to maximize its profie. Assume that when the price is exacty equal to the average variabie cost, the firm is indifferent between producing zero jackets and the proft-maximizing quandity. Also, indicate whether the fiem wil produce, shut down, or be indiferent between the two in the short run. Lastiy, determine whether e w make a prafit, suffer a loss, ar break even at each price. Price Quantity (Dollars per jacket) (Jackets) Produce or Shut Down? Profit or Loss? 4 12 36 48 60Price and cost (dollars per student) $150 120 88 76 72 ATC 40 - MC MR 24,000 30,000 36,000 Quantity of students enroiled 15,000 Your college decides to offer a psychology course as a MOOC that can be taken by students anywhere in the world, whether they are actually enrolled in your college or not. The demand and cost situation for the MOOC is shown in the figure. The faculty member who designed the course argues: "I think the course should be priced so that the maximum number of students enroll." Which price should this faculty member favor? O A. $0 В. $40 C. $88 D. $150
- You own a printing firm. Two of yoursenior managers provide you with advice. Thefirst manager states that your company islosing money for every unit that is printed. Tominimize losses, she advises that you reduceyour production levels. The second managerstates that if your firm sells some more units,the price will cover your increase in costs. Inorder to reduce losses, the second managerrecommends that you should increaseproduction. Explain which manager iscorrect and who is offering the correctadvice?A business's marginal cost has a minimum value of $3; its average variable cost has a minimum value of $6; and its average total cost has a minimum value of $7. Given this information, the business should exit at any price below and shut down at any price below Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b с e Question 2 f $3; $6 $6; $3 $7; $6 $6; $7 $3; $7 $7; $3The market for apple pies in the city of Ectenia is competitive and has the followingdemand schedule:Price Quantity Demanded$ 1 1,200 pies2 1,1003 1,0004 9005 8006 7007 6008 5009 40010 30011 20012 10013 0 ch producer in the market has fixed costs of $9 and the following marginal cost:Quantity Marginal Cost1 pie $ 22 43 64 85 106 12a. Compute each producer’s total cost and average total cost for 1 to 6 pies.b. The price of a pie is now $11. How many pies are sold? How many pies does eachproducer make? How many producers are there? How much profit does eachproducer earn?c. Is the situation described in part (b) a long-run equilibrium? Why or why not?d. Suppose that in the long run there is free entry and exit. How much profit does eachproducer earn in the long-run equilibrium? What is the market price? How many piesdoes each producer make? How many pies are sold in the market? How many pieproducers are operating?