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 6DQ
To determine
Marginal cost curve and variable cost curve in the pure competition.
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Students have asked these similar questions
4. Various measures of cost
Suppose the imaginary company of Roobek is a small, Jackson-based American apparel manufacturer specializing in athleisure. The following table
presents the brand's total cost of production at several different quantities.
Fill in the remaining cells of the following table.
Quantity Total Cost Marginal Cost
(Pairs) (Dollars) (Dollars)
0
1
2
3
4
LO
5
6
120
200
240
285
340
425
540
Fixed Cost Variable Cost
(Dollars) (Dollars)
Average Variable Cost
(Dollars per pair)
Average Total Cost
(Dollars per pair)
In the table below, the firm;
Output Total Revenue Total Cost
$0
$30
$60
$90
$120
$150
$180
$25
$49
$69
$91
$117
$147
$180
O a. cannot be in a perfectly competitive industry, because its short-run economic profits
are greater than zero.
O b. must be in a perfectly competitive industry, because its marginal cost curve
eventually rises.
O c. cannot be in a perfectly competitive industry, because its long-run economic profits
are greater than zero
O d. must be in a perfectly competitive industry, because its marginal revenue is constant.
123 456
The figure shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces
O A. 20 units of output and earns a normal profit.
MC
ATC
50
B. 10 units of output and incurs an economic loss.
40
O C. 10 units of output and earns a normal profit.
O D. 20 units of output and incurs an economic loss.
30
MR
20
10
10
30
40
Quantity (per day)
Price and costs (dollars)
20
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Similar questions
- 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.arrow_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_forwardSuppose 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.arrow_forward
- Suppose a feed mill is looking at their total revenue. If they receive $36 per sack of horse feed and $14 per sack of cattle feed, how much will their total revenue change if the mill increased the sacking of horse feed from 10,000 sacks to 20.000 sacks and decreased the sacking of cattle feed from 128,000 sacks to 119,000 sacks O Revenue will increase by $234,000 Revenue will decrease by $400.000 O Revenue will decrease by $184.000 O Revenue will increase by $250.000arrow_forwardFigure 14-1 Suppose that a firm in a competitive market has the following cost curves: Refer to Figure 14-1. If the market price falls below $6, the firm will earn O a. positive economic profits in the short run. O b. negative economic profits in the short run but remain in business. O c. negative economic profits in the short run and shut down. O d. zero economic profits in the short run. PRICE 20 18 16 14 13 10 8 6 4 2 MC 1 2 3 QUANTITY 4 ATC AVC 5arrow_forwardQUESTION 15 If a firm decides to exit the market will be paying O a. only the fixed costs but not the variable costs. O b. neither variable costs nor fixed costs. Oc only the variable cost but not the fixed cost. O d. both variable costs as well as fixed costs. QUESTION 16 Which of the following is true for a perfectly competitive firm? O The price of the product is equal to marginal revenue at all times. The price of the product is equal to marginal cost at all times. Marginal cost is equal to marginal cost at all times Total revenue is equal to total cost at all times.arrow_forward
- A perfectly competitive firm that makes car batteries has total fixed costs of $10,000 per month. The market price at which it can sell its output is $100 per battery. The firm's minimum AVC Is $105 per battery. The firm is currently producing 500 batteries a month (the output level at which MR=MC). This firm is making a O loss, shut down O profit, shut down O profit: increase O loss; increase and should. productionarrow_forwardTable: Total Cost and Output Table: Total Cost and Output Output Total Cost 0 1 2 3 4 $ 10 60 80 110 170 245 Use Table: Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. If the market price of a tub of ice cream is $67.50, how much is Sergei's total revenue at the profit-maximizing output? O $270.00 O $170.00 $100.00 $67.50arrow_forwardIf a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the and the vertical axis will represent OA. price, measured in dollars; quantity of goods produced O B. total costs measured in dollars; quantity of goods produced O C. quantity produced; both total revenue and total costs, measured in dollars. O D. quantity produced; total revenue and total variable costs, measured in dollars.arrow_forward
- .ll touch LTE 10:05 PM O 9 37% O A docs.google.com In a perfectly competitive market, what happens to a firm's profit-maximizing level of output if the price of the product falls? * Because the firm maximizes profit by setting marginal revenue equal to O marginal cost, an increase in the price of the product will reduce the firm's profit-maximizing level of output. Because the firm maximizes profit by setting marginal revenue equal to marginal cost, a decline in the price of the product will not affect the firm's profit-maximizing level of output. Because the firm maximizes profit by setting marginal revenue equal to marginal cost, a decline in the price of the product will reduce the firm's profit-maximizing level of output. Because the firm maximizes profit by setting marginal revenue equal to marginal cost, a decline in the price of the product will increase the firm's profit-maximizing level of output.arrow_forwardWhich of the following is always true for the profit-maximizing firm in a perfectly competitive output market (as discussed in Chapter 8): O a. The economic profit at the profit maximizing output is negative. O b. The profit maximizing output is equal to the price given by the market. Oc. The economic profit at the profit maximizing output is positive. O d. At profit maximizing output, the slope of the total cost curve is equal to the slope of the total revenue curve. Say you have following Engle curve (which are the dashed lines) relating household income and pollution: FIGURE 1.-POLLUTION EMBODIED IN HOUSEHOLD CONSUMPTION: PM10 O 1984 2012 10 15 Average After-Tax Income (10,000 2002 $) Which of the following statements about this Engle curve is true in 2012? Select one: O a. Household pollution is a Giffen good. O b. Household pollution is a normal good. O c. Househald pollution is an inferior good. O d. Household pollution starts as an inferior good, and then becomes a normal good.…arrow_forwardSuppose a profit maximizing, perfectly competitive firm is collecting $1,700 in total revenues and the total costs of its variable factors of production are $1,900 at its current level of output. One can predict that the firm will O Earn a loss but continue to operate Earn a profit O Raise its price O Shut down O Increase its outputarrow_forward
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