Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 10, Problem 4DQ
To determine
Shutdown point.
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Students have asked these similar questions
Suppose that the pen-making industry is perfectly competitive. Also suppose that each current firm and any potential firms that might enter the industry all have identical cost curves, with minimum ATC = $1.25 per pen. If the market equilibrium price of pens is currently $1.50, what would you expect it to be in the long run? LO11.2 a. $0.25. b. $1.00. c. $1.25. d. $1.50.
7. Long-run cost relationships
The following graph shows the short-run average total cost curves and the long-run average cost curve for a publishing firm. The five marked
quantities indicate points of tangency between each short-run average total cost curve (SRATC) and the long-run average cost curve (LRAC); for
example, Q₁ marks the point of tangency between SRATC₁ and LRAC.
The orange point on SRATC3 indicates the firm's current output level in the short run (Q3).
COST PER UNIT
SRATC₁
LRAC
SRATC2
|
"
Q₂2₂
SRATC3
O
"
|
1
1
Q3
QUANTITY OF OUTPUT
Q₁
SRATC5
SRATC4
1
The following figure shows the revenue and cost curves for a firm X.
RM
10
a.
b.
C.
7
6
LO
5
4
3.5
0
20 25 30
MC
40
AVC
AC
AR=MR
Units
If a firm X achieves productivity efficiency, what will be the total revenuel
generated
At what price will a firm stop operating? Please explain.
If the market price is RM4.00, what is the total profit or total loss.
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Similar questions
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- Stuff, Incorporated is a firm with a total revenue of $1,000, marginal cost of $5, and average variable cost of $4. Both the output and input markets are perfectly competitive and Stuff, Inc. is in long run equilibrium. Stuff, Inc.'s output and total fixed costs must be equal to which of the following? O Output 200; Fixed Cost $200 O Output 200; Fixed Cost $400 O Output 200; Fixed Cost $800 O Output 250; Fixed Cost $800 O Output 250; Fixed Cost $400arrow_forwardQUESTION 7 Given the accompanying table, what is the short-run profit-maximizing level of output for the firm? Output Total Revenue Total Cost $4 8 3 12 4 16 5. 20 14 O 3 units O 4 units O 2 units 5 units 0000arrow_forward........ # m SI 4. 2. He %3D Consider the following costs for a typical perfectly competitive firm with no fixed costs (average total cost = average variable cost). Average Total Cost Quantity Marginal Cost $24 1. 16.5 6$ 12.67 3. 7. 15 11.25 12 5. 14.83 9. a. Which of the following prices would be associated with a long-run equilibrium? O $11.25 O $15 O $12 Next> < Prev 9 jo 9 72°F Partly sunny 近 ere to search ofile Ball10 F7 F3 & %23 24 4. 2. R. K H B.arrow_forward
- LO 11.2: I can calculate marginal cost, revenue, and profit and distinguish between marginal cost and average cost. Suppose that Patrick's Handmade Puppets has a production cost that is given by C(x) = 2,000 + 130x – 0.6x2 + 0.002x3 dollars (0arrow_forwardThe table below shows cost data for WipeOutSki Company which manufactures skis for beginners. If the company's fixed costs are $30, what is the marginal cost of five units of output? Variable Cost Fixed Cost Total Cost Average Variable Cost Average Total Cost Marginal Cost Quantity $30 1 $10 $30 $25 $30 $45 $30 $70 $30 $100 $30 B. $135 $30 O $45.00 O S30.00 O S25.00 2) 3. 4) 69arrow_forwardA marginal cost curve intersects average total cost at $6. This curve also intersects average total cost at $9. a. It is most accurate to say this firm will generate a loss at any price below $6 below $9 above $9 above $6 c. Which of the choices best explains why this price will cause the firm to shut down instead of continuing to operate at a loss? O O O O O total revenue > total variable costs total revenue > total fixed costs total revenue total fixed costs b. At what price level will this firm shut down immediately, with certainty? Any price below $9 Any price above $9 Any price below $6 Any price above $6arrow_forwardScenario 5.1 A dentist's practice is organized as a sole proprietorship. Last year the dentist's tota revenue was $320,000 and total costs were $250,000. The dentist left a job paying $112,000 a year to start the sole proprietorship. Question: According to the information in Scenario 5.1, how much accounting profit did the dentist make last year? O $208,000 O $112,000 O $320,000 O $70,000arrow_forwardSuppose 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?arrow_forward3. Suppose the doll company American Girl has an inverse demand curve of P = 150 - 0.25Q, where Q measures the quantity of dolls per day and P is the price per doll. There production function equals Q = LO.5KO.5, they pay wages of 35 and they pay capital rates of 140. What is their daily long-run profit at the profit-maximizing output level?arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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