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6.
(Short-Run Loss) Suppose a firm decides to shut down in the short run. What is the resulting loss?
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- 4 (Kindly see attached screenshot) The firm depicted in Figure 6-10 currently is producing 200 units of output per day. If it decides to increase its output level to 375 units, then it will a. adjust from point F to point G in the short run b. be unable to adjust to point G in the short run because some inputs are fixed c. be unable to adjust to point G in the long run because some are fixed d. be unable to adjust to point H in the short run because some inputs are fixed e. adjust from point F to point H in the long run Please be as detailed as possible in your answer.5. (a) What do we mean by “price taker”? Explain why a firm in perfect competition is a price taker.How is this price determined? Explain. (b) “The demand curve for a perfectly competitive firm ishorizontal and it is also the firm’s marginal revenue curve.” Explain.28. (Figure: Competitive Firm Cost Curves) Refer to the figure. Calculate the profit of this firm. MC Price $10 $8 $7 a. $435 b. $405 c. $270 d. $290 90 AC MR 135 145 160 Quantity
- (Table: Costs for Alina's Apple Pies) Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $38, what profit (or loss) will this firm earn? a profit of $200 a loss of $30 T a loss of $200 a profit of $80 This is what I think the answeris(Table: Costs for Alina's Apple Pies) Use the table Costs for Alina's Apple Pies. If Alina's Apple Pies operates in a perfectly competitive market and the market price for a pie is $38, what profit (or loss) will this firm earn?Possible solutions a profit of $80 a loss of $30 a profit of $2002. Which of the following are true? (check all that apply) a.the average fixed cost is increasing if there are economies of scale occuring b.if the marginal cost is less than the average cost, the average cost is negatively sloped c. Average fixed costs never increase with output d. average total costs are always greater than or equal to average variable costs
- 8. (The Short-Run Firm Supply Curve) Each of the followingsituations could exist for a perfectly competitive firm in the short run. In each case, indicate whether the firm should produce in the short run or shut down in the short run, or whether additional information is needed to deter- mine what it should do in the short run.a. Total cost exceeds total revenue at all output levels. b. Variable cost exceeds total revenue at all output levels. c. Total revenue exceeds fixed cost at all output levels. d. Marginal revenue exceeds marginal cost at the currentoutput level. e. Price exceeds average total cost at all output levels. f. Average variable cost exceeds price at all output levels. g. Average total cost exceeds price at all output levels.4. (6+6+6+6+6+6 points) The graph below displays the short-run average variable cost (AVC), the short-run average total cost (ATC), and the marginal cost (MC) curves of a company Y which produces a homogenous product in a perfectly competitive industry. The vertical axis shows cost while horizontal axis shows the level of output. Suppose that the equilibrium price is equal to $30. MC ATC $40 $38 $30 AVC $20 $15 35 40 Output i. Using the graph above, find the profit-maximizing output of Y in the short-run and marginal revenue at this output. ii. Using the graph above, find the total fixed cost of Y. What is the average fixed cost when Y produces 40 units of output? Cost(1.) Johnny Rockabilly has just finished recording his latest CD. His record company marketing department determines that the demand for the CD is as follows: Number of CDs Price $24 10,000 22 20,000 20 30,000 18 40,000 6 50,000 3 60,000 The company can produce the CD with no fixed cost and a variable cost of $12 per CD. a. Find total revenues and marginal revenues for each of the quantities. b. What quantity of CDs would maximize profit? What would the price be?
- 3. (Long-run costs,) Carmela's pasta factory employs workers and pasta machines according to the following production function f(L,K) = 10.5K0.5 The hourly cost of capital is $10 and the hourly cost of workers is $40. a. Write out the Lagrangian for the cost-minimization problem. b. Using the first order conditions of the Lagrangian, derive the optimal capital to labor ratio. Describe the long-run output expansion path. c. Suppose Carmela wishes to produce 1000 units of pasta. How much labor and capital should she employ? How much will it cost to produce? d. An order arrives doubling the amount of pasta Carmela needs to produce. Assuming she is unable to purchase more capital, how much will it cost to meet the new production level? e. In the long-run, Carmela will be able to employ more capital as well as labor. If Carmela continues to produce 2000 units of output, how much will it cost in the long run? How is it comparing to your answer in part d?8-1 Describe the market structure of perfect competition1. (Market Structure) Define market structure. What factors are considered in determining the market structure of a particular industry?2. (Perfect Competition Characteristics) Describe the characteristics of perfect competition.3. (Demand Under Perfect Competition) What type of demand curve does a perfectly competitive firm face? Why?(The Short-Run Firm Supply Curve) Use the following datato answer the questions below: a. Calculate the marginal cost and average variable costfor each level of production.b. How much would the firm produce if it could sell itsproduct for $5? For $7? For $10?c. Explain your answers.d. Assuming that its fixed cost is $3, calculate the firm’sprofit at each of the production levels determined inpart (b).
