Opal & Co. produced and sold 500 dog beds. The average cost of production per bed was $50. Each dog bed sold for a price of $65. Suppose regulations increased per unit cost by $5 per bed. Opal & Co’s total profit: a. Increased by $5,000 b. Decreased by $5,000 c. Increased by $2,500 d. Decreased by $2,500
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Opal & Co. produced and sold 500 dog beds. The average cost of production per bed was $50. Each dog bed sold for a price of $65. Suppose regulations increased per unit cost by $5 per bed. Opal & Co’s total profit:
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- A profit-maximizing firm in a competitive market is currently producing 500 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b. What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?I. A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels: Total revenue = $1,450 Total cost = $1,500 Total variable cost = $1,300 What would you suggest? a. Shut down. b. Continue to produce because the loss is less than the total fixed cost. c. Increase production to lower the marginal cost. e. Raise the price. II. At current long-run production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. If the market is perfectly competitive, the firm should a. cut back on production. b. stop production all together. c. produce more. d. continue producing at current levels.There are 38 nearly identical ABC stores within a one-mile radius in Waikiki. The combined size of these 38 stores allows ABC to offer large quantities at favorable prices. a. ABC gained market power through economies of scale government protection control of an important input . b. ABC’s market power does does not guarantee that the firm makes an economic profit.
- 12. A firm faces the following demand and total cost schedules, with all quantities listed on a per-month basis. Suppose that it is required to produce a whole number of items each month. Demand P ($) 20 18 15 12 8 1 2 3 4 5 Total Cost Q 1 2 3 4 5 TC ($) 5 15 30 50 75 a. How much does the firm produce, and at what price? How do you know? b. Suppose that the firm is subject to an excise tax of $5 per item sold. How much does it produce, and at what price? How do you know?Rob quit his $4,000/month coffee shop position and started an ice-cream business. Rob does not get paid a salary for running the ice-cream business. When calculating the economic profit of the ice-cream business, his old $4,000 coffee shop salary is Select one: a. counted as part of the total revenue. b. counted as part of the implicit costs. c. counted as part of the explicit costs. d. ignored.in which of the following statement is true? (choose one letter only) a. the Marginal Revenue is the approximate revenue from the production and sale of the x+1 unit after x units have been sold.b. the Marginal Cost is the approximate cost of producing the x−1 unit before x units have been produced. c. the Marginal Profit is the profit from the production and sale of the xth unit. d. All of these e. none of the above
- Currently the firm is producing at a profit maximizing quantity of output and has a total revenue of $5000. Variable costs are $4000 and Fixed costs are $2000. Which of the following is true for this firm in the short run: A. The firm should continue producing at a loss B. The firm should shut down immediately C. The firm should continue to produce since it is making profit D. The firm should adjust (increase or decrease) outputA 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.\a. What is its profit?b. What is its marginal cost?c. What is its average variable cost?d. Is the efficient scale of the firm more than, less than, or exactly 100 units?3. Johnny Rockabilly has just finished recording his latest CD. His record company's marketing department determines that the demand for the CD is as follows: Price Number of CDs $24 10 000 22 20 000 20 20 30 000 18 40 000 16 50 000 14 60 000 The company can produce the CD with no fixed cost and a variable cost of $5 per CD. a. Find total revenue for quantity equal to 10 000, 20 000, and so on. What is the marginal revenue for each 10 000 increase in the quantity sold? b. What quantity of CDs would maximize profit? What would be the price? What would be the profit? c. If you were Johnny's agent, what recording fee would you advise Johnny to demand from the record company? Why?
- Using the graph for the questions : A. There are fixed costs of $50 no matter what the output level is. Fill in the fixed cost column B. Fill in the total costs column C. Fill in the marginal costs column D. This is a perfectly compatible firm . The market price for the output they produce is $40/ unit of output. Fill in the marginal revenue column E. Fill in the total revenue column F. Fill in the profit column G. What is the profit maximizing level of outputPart A. When the demand curve is given by P1 = $30, and the firm behaves optimally in the short run, what is the total revenue? A. $ 900 B. $1350 C. $800 D. $2400 Part B. When the demand curve is given by P1 = $30, how much profit is this producer earning? A. $ 500 B. $ 800 C. $ 1200 D. $ 1600 Part C. Does the graph above represent the firm’s short run equilibrium or long run equilibrium, for a given price? A. short run B. long run C. short run or long run D. neither short run nor long runRefer to the figure below. If the firm is producing the level of output that maximizes profit, its total cost of production is Price ($) 18 MC1 16 14 12 10 ATC1 8 6 AVC1 4 2 MR 10 20 30 40 50 60 70 80 90 Quantity Select one: a. $400 b. $510 c. $330 d. $160