Perez Lumber Company sells surfboards in a perfectly competitive market. The marginal cost of surfboards at the current output of 445 feet is $3.57 per foot. The price of surfboards is $3.57 per foot, and the minimum possible average variable cost of producing surfboards is $3.88 per foot. To maximize profit, it should increase monthly output above 445 board feet. O continue producing at its current output level. shut down immediately. decrease monthly output below 445 board feet.
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- Frances sells pencils in the perfectly competitive pencil market. Her output per day and her costs are as follows: Output per Day Total Cost Variable Cost АТС AVC MC $1.00 1 2.50 1.50 2.50 1.50 1.5 3.50 2.50 1.75 1.25 1 3 4.20 3.20 1.40 1.067 0.7 4 4.50 3.50 1.125 0.875 0.3 5.20 4.20 1.04 0.84 0.7 6.80 5.80 1.33 0.97 1.6 7 8.70 7.70 1.24 1.1 1.9 8 10.70 9.70 1.34 1.21 If the current equilibrium price in the pencil market is $1, how many pencils will Frances produce, what price will she charge, and how much profit (or loss) will she make?Assume a purely competitive increasing cost industry is intislly long eun equilibrium producing 10 million units atca market price of $5.00. Supoose that increaae in consumer demand occurs. After all economic adjustments have been completed which output and price combination is most likely to occur ? 9.5 units at a price of $4.50 11 units at a price of $4.75 9 units at a price of $5.25 12 units at a price of $5.50$ $11.00 $9.00 $6.00 0 This firm is experiencing an: O economic profit of $200 O economic loss of $1,100 Oeconomic loss of $200 economic profit of $1,100 k 85 100 MC ATC AVC MR Quantity
- Bob’s lawn-mowing service is a profit-maximizing,competitive firm. Bob mows lawns for $27 each. Histotal cost each day is $280, of which $30 is a fixedcost. He mows 10 lawns a day. What can you sayabout Bob’s short-run decision regarding shutdownand his long-run decision regarding exit?The average variable cost (AVC) 1 and average total cost (ATC) of a price taker firm are provided below. According to this table, if the marginal revenue (MR) is $95, what decision should this firm take in the short-run? Quantity Average Variable Cost Averge Total Cosm 100 25 100 20 150 20 150 23 100 15 100 17 100 19 15030 150 19 150.25 11 O Exit the market Enter in to the market The firm will go for a temporary shutdown Continue production2. For cases A through F in the following table, would you (1) operate or shut down in the short run and (b) expand your plant or exit the industry in the long run? A В D E F TR 500 1,500 2,500 5,000 5,000 5,000 TC 800 1,000 3,200 4,500 5,000 5,500 TFC 150 500 200 1,500 1,500 1,500
- The cost data in the following table are for Marshall’s Meats, a perfectly competitive firm. Round your answers to 2 decimal places. Output Average Variable Cost AverageTotal Cost MarginalCost Total Cost 0 / / / $ 100 1 $ $ $ 130 2 150 3 180 4 220 5 270 6 330 7 440 a. Complete above the table. b. What is the break-even price? Break-even price: $ c. What is the shutdown price? Shutdown price: $ d. If the market price of the product is $50, what quantity will Marshall’s Meats produce? What will be its profit or loss? Quantity: ; (Click to select) Loss Profit : $ e. If the market price of the product is $110, what quantity will Marshall’s Meats produce? What will be its profit or loss? Quantity: ; (Click to select) profit loss : $Apex is a perfectly competitive firm. It has total fixed costs of $300/day and a daily variable cost schedule in the table below. Apex’s product sells for $200 per unit. Quantity (units) 0 1 2 3 4 5 6 7 8 9 10Total Variable Cost (TVC) 0 100 180 220 300 390 500 640 800 1000 1250Answer the following questions:a. What is the profit-maximizing level of output? Calculate Apex’s profit.b. If the market price dropped to $80, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?c. If the market price dropped further to $40, what is the profit-maximizing level of output? What is Apex’s profit (or loss) in this case?d. Comment on your answers to parts (2) and (3Suppose a perfectly competitive firm is operating in short run. The information of MR, Q,ATC and AVC are 15 taka, 60 unit, 45taka and 35 taka respectively. Calculate firm’sprofit/loss and total fixed cost. From these calculations and based on all the giveninformation, can you conclude about the firm’s decision in short run? Explain your reasoningwith the help of a suitable diagram. Show all the relevant information in yourdiagram.[Q=profit maximizing output and MR=marginal revenue]
- Consider a perfectly competitive firm's average total cost curve, average variable cost curve, and marginal cost curve. MC ATC 30.00- 28.00- 26.00- If the market price is $15.00 per unit the firm will V by 24.00- producing. AVC 22.00- In the short run, the firm should 20.00- 18.00- experience losses O A. shut down; price is greater than AVC 16.00- 14.00- 12.00- 10.00- O B. shut down; price is less than ATC make a profit OC. shut down; price is less than FC break even 8.00- O D. continue to produce; price is greater than 6.00- O E. continue to produce; price is greater than AVC 4.00- 2.00- 0.00- 6 Quantity Price and costTotal Product 1 23 2 3 456 5 7 8 9 10 Multiple Choice O Average Fixed Cost $ 150.00 75.00 50.00 37.50 30.00 25.00 21.43 18.75 16.67 15.00 O The accompanying table gives cost data for a firm that is selling in a purely competitive market. The marginal cost column reflects economies of scale. Average Variable Cost $ 25.00 23.00 20.00 21.00 23.00 25.00 28.00 33.00 39.00 48.00 diseconomies of scale. the law of diminishing returns. Average Total Cost $ 175.00 98.00 70.00 58.50 53.00 50.00 49.43 51.76 55.67 63.00 the law of diminishing marginal utility. Marginal Cost $ 25.00 21.00 14.00 24.00 31.00 35.00 46.01 68.07 86.95 128.97The table shown displays the total costs for various levels of output for a firm operating in a perfectly competitive market. Price $50 $50 $50 $50 $50 $56 When one unit is produced exceed O marginal costs, marginal revenue, more O marginal revenue; marginal costs more O marginal revenue, marginal costs; less Omarginal costs, marginal revenue, less and the fem should produce Quantity 0 1 2 3 4 15 TC $10.00 $20.00 $2750 $77 50 $147.50 $250 00