Question 2: The figure shows the situation facing Lite and Kool Inc., a producer of running shoes. 동100 MC ATC -8 80 60 40 20 MR 50 100 150 200 Quantity (pairs of running shoes per week) What quantity does Lite and Kool produce? a. b. What is the price of a pair of Lite and Kool shoes? What is Lite and Kool's economic profit or economic loss? C. Price and cost (dollars per pair)

Question 2: The figure shows the situation facing Lite and Kool Inc., a producer of running shoes. 동100 MC ATC -8 80 60 40 20 MR 50 100 150 200 Quantity (pairs of running shoes per week) What quantity does Lite and Kool produce? a. b. What is the price of a pair of Lite and Kool shoes? What is Lite and Kool's economic profit or economic loss? C. Price and cost (dollars per pair)

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter12: Firms In Perfectly Competitive Markets

Section: Chapter Questions

Problem 13P

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Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.
Question 2: The figure shows the situation facing Lite and Kool Inc., a producer of running shoes. 호 100 MC ATC 8 80 I 60 40 20 D MR 50 100 150 200 Quantity (pairs of running shoes per week) a. What quantity does Lite and Kool produce? b. What is the price of a pair of Lite and Kool shoes? с. What is Lite and Kool's economic profit or economic loss? Price and cost (dollars per pair)
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3. The components of marginal revenue Bob's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Bob produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Bob faces. As you can see, to sell the additional engine, Bob must lower his price from $160,000 to $120,000 per fire engine. Note that while Bob gains revenue from the additional engine he sells, he also loses revenue from the initial five engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000. PRICE (Thousands of dollars per fire engine) 200 180 160 140 120 100 80 60 40 20 0 + 0 1 2 Bob in this scenario.…
3. The components of marginal revenue Lorenzo's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Lorenzo produced five fire engines, but he is considering increasing production to six fire engines. The following graph shows the demand curve Lorenzo faces. As you can see, to sell the additional engine, Lorenzo must lower his price from $105,000 to $90,000 per fire engine. Note that although Lorenzo would gain revenue from the additional engine he sells, he would also lose revenue from the initial five engines because he would have to sell them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $90,000 rather than $105,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $90,000. PRICE (Thousands of dollars per fire engine) 150 135 120 105 90 75 60…