Draw the MC and AVC curves and show graphically: (a) Shut-down price. (b) Short-run supply curve. (c) The optimal production level if p >Min(AV C). (d) The optimal production level if p
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Draw the MC and
(a) Shut-down
(b) Short-run supply curve.
(c) The optimal production level if p >Min(AV C).
(d) The optimal production level if p <Min(AV C).
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- A firm's short-run average cost curve is U-shaped. Which of these conclusions can be reached regarding the firm's returns to scale? [1] The firm experiences increasing returns to scale. [2] The firm experiences increasing, constant, and decreasing returns in that order. [3] The firm experiences first decreasing, then increasing returns to scale. [4] The short-run average cost curve reveals nothing regarding returns to scale. [5] None of the options [1], [2], [3] and [4] provides a correct answer.a) Given that Equilibrium price is $20, Profit maximizing level of output is 150 units, Average total cost is $25 and Average Variable Cost is $15 at this level of output, calculate Total Revenue, Total Cost, Total Fixed Cost, Profit/Loss. Should they continue production of shut down? Your answer b) Draw a diagram to show the above case.Letters are used to represent the terms used to answer this question: price(P),quantity of output(Q),total cost(TC)and average total cost(ATC).Which of the following equations is equal to a firm's average profit? A. (P −ATC) × Q B. P−ATC C. (P×Q)−TC D. P−TC
- LAC turns up at higher scale due the presence of a. barriers to entryb. economies of scalec. diseconomies of scaled. the Law of Diminishing Returns (LDR)e. the Law of Supply35) Long-run cost curves are U-shaped because A) of the law of demand. C) of economies and diseconomies of scale. B) of the law of diminishing returns. D) of the law of supply.The relationship between the firm's average variable, average total, and marginal cost curves above: Marginal Reveue = Price = US $ 2.50 ; a) Use the graph to find the Firm's profit-maximizing output. b) If the firm maximizes its profit, how much profit does it make (about)? Should the firm stay in business? c) Will other firms with costs the same as Firms enter the market? Explain.
- (b) Calculate the economic profit at the profit-maximizing quantity you identified in part (a). Show your work.Consider a kettle firm A in a perfectly competitive market. Table 1 shows the quantity produced per hour (Q) and the total cost (TC) in the short run. Quantity 0 12345C70 2 6 8 Total cost 17 30 40 55 75 100 130 165 210 Fixed cost 17 17 17 17 17 17 17 17The data below shows tabulation on the production of a hypothetical product.Output (Q) Total cost (TC)Units Kshs.0 - 251 - 322 - 383 - 424 - 485 - 586 - 677 - 788 - 98i. Using the above data, determine:· Total fixed cost · Average variable cost schedule · Marginal cost schedule Suppose this product is produced on a perfect market and the price of the commodity = 10, determine the output Q that will maximize the profits. What is the maximum profits achieved by the firm?
- Assume that the total cost (fixed costs and variable costs) of producing 15,000 units of a good amounts to $300,000. If we add a "markup" equal to 25% of cost, what would be the per-unit selling price of our good? Hint: this is a "cost-plus mark-up" scenarioa.$20b.$25c.$12d.$15Variable costs are Multiple Choice costs that remain to be paid even if the firm shuts down temporarily. costs that change every day or every month. costs that change with the level of production. changes in total cost due to the production of an additional unit of output.For each of the following events identify which of the determinates of demand or supply are affected. Also indicate whether demand or supply is increased or decreased. Why? A stock market crash lowers people’s wealth. Batelco increases the prices of mobile services. Diminishing returns mean rising costs while economies of scale mean falling costs. Therefore, a firm cannot be facing both diminishing returns and economies of scale. Do you agree? Why or why not?
