(Figure: Price and Quantity V) At the profit-maximizing output level, this firm earns a profit of: Price ($) 10 9 8 7 6 5- O $48. 732- O $60. 4 3 O $60. 2 1 O $20. 0 MC L 246 8 ATC D 10 12 14 16 18 20 Quantity
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- Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.Suppose that each firm in a competitive industry has the following costs: Total cost: TC = 50 + q2 Marginal cost: MC = q where q is an individual firms quantity produced. The market demand curve for this product is Demand:QD = 120 P where P is the price and Q is the total quantity of the good. Currently, there are 9 firms in the market. a. What is each firms fixed cost? What is its variable cost? Give the equation for average total cost. b. Graph average-total-cost curve and the marginal-cost curve for q from 5 to 15. At what quantity is average-total-cost curve at its minimum? What is marginal cost and average total cost at that quantity? c Give the equation for each firms supply curve. d. Give the equation for the market supply curve for the short run in which the number of firms is fixed. e. What is the equilibrium price and quantity for this market in the short run? f. In this equilibrium, how much does each firm produce? Calculate each firms profit or loss. Is there incentive for firms to enter or exit? g. In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h. In this long-run equilibrium, how much does each firm produce? How many firms are in the market?What is a price taker firm?
- The AAA Aquarium Co. sells aquariums for 20 each. Fixed costs of production are 20. The total variable costs are 20 for one aquarium, 25 for two units, 35 for the three units, 50 for four units, and 80 for five units. In the form of a table, calculate total revenue, marginal revenue, total cost, and marginal cost for each output level (one to five units). What is the Profit-maximizing quantity of output? On one diagram, sketch the total revenue and total cost curves. On another diagram, sketch the marginal revenue and marginal cost curves.What two lines on a cost curve diagram intersect at the shutdown point?What prevents a perfectly competitive firm from seeking higher profits by increasing the price that it charges?
- Q23 Suppose a perfectly competitive firm is currently operating with the following information: Output = 1500 tonnesAverage total cost = $627 per tonneAverage variable cost = $614 per tonneMarginal revenue = $620 per tonneMarginal cost = $620 per tonneAt the current level of output, this firm is _____ profit and is an earning economic profit of _____. a. Maximising; -$10500. b. Not maximising; -$10500. c. Maximising; $10500. d. Maximising; $9000. e. Not maximising; -$9000.Figure 6.1 MC ATC AVC MR2 MR, 30 40 50 60 Quantity Refer to Figure 6.1. Given MR2, what is total revenue if the firm produces 60 units and the lowest point of the average-total-cost curve is $4? O $400 O$240 O$440 O S30000 CO T 2. 75 50 TOTAL COST AND REVENUE (Dollars) 3. Profit maximization using total cost and total revenue curves Suppose Susan runs a small business that manufactures frying pans. Assume that the market for frying pans is a competitive market, and the market price is $20 per frying pan. The following graph shows Susan's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for frying pans quantities zero through seven (inclusive) that Susan produces. 00. 175 Total Revenue 150 Total Cost 125 Profit 25 -25 4 9. QUANTITY (Frying pans) 8 3. 5. 7. MacBook Pro -CHEF- 23 2$ 4. M K H M X
- According to this graph, what is the profit-maximizing quantity for this firm? Price (S) 27 24 21 18 15 O O 0 50 68 30 2963 MC1 ATC1 AVC1 MR₁ 10 20 30 40 50 60 70 80 90 QuantityBased on the table, what is total revenue for John's Tricycle Company if it produces at its profit- maximizing output? Output Marginal Total Cost Revenue 7,500 5. 1,300 1,400 1,500 1,600 0006 10,500 7. 8. 000 13,500 O 10,5003. Profit maximization using total cost and total revenue curves Suppose Ana runs a small business that manufactures shirts. Assume that the market for shirts is a perfectly competitive market, and the market price is $20 per shirt. The following graph shows Ana'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 Ana produces, including zero shirts. TOTAL REVENUE, TOTAL COST, AND PROFIT (Dollars) Total Revenue A 125 100 Total Cost ☐ Profit 200 175 150 75 50 ༔་ཎྜ་ ྴ་སྐྱ ིི་ཐྭ་8་མ་° 1 2 3 4 5 6 7 8 QUANTITY OF OUTPUT (Shirts) (?) Calculate Ana's marginal revenue and marginal cost for the first seven shirts she 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. Note: Be sure to plot marginal values between the appropriate whole unit values. For instance, plot…