In economic theory, it can be shown that the optimal quantity produced for a company, is...
In economic theory, it can be shown that the optimal quantity produced for a company, is realized when the price equals marginal cost.
- Explain why P = MC, gives maximum profits.
Assume that the costs are given
by:
C(X)=50+2X+X2
b) Calculate the marginal costs.
c) Calculate optimal production level/amount and profit, when the market price is $22.
d) Assume that the market price increases. How will the firm react to this, if they still want to maximize profits?
Homework Answers
Add Answer to:
In economic theory, it can be shown
that the optimal quantity produced for a company, is...
1. In the long run the effect of economic profits is to: Increase market supply and...
1. In the long run the effect of economic profits is to: Increase market supply and increase market price. Decrease market supply and increase market price Decrease market supply and decrease market price. Increase market supply and decrease market price. 2.To maximize profits, a competitive firm will seek to expand output until: Price equals marginal cost. The elasticity of demand equals 1. Total revenue equals total cost. Price equals $0. 3.A firm should shut down production when: P < minimum...
To maximize profit, a price taker will expand its output as long as the sale of...
To maximize profit, a price taker will expand its output as long as the sale of additional units adds more to revenues (marginal revenues) than to costs (marginal costs). Therefore, the profit-maximizing price taker will produce the output level at which marginal revenue (and price) equals marginal cost. In a price-taker market, if a business produces efficiently (i.e., that is, where marginal revenues = marginal costs), the firm will be able to make at least a normal profit. True of...
3. Consider an industry with market demand characterized by: P = 6300 - 32. Suppose the...
3. Consider an industry with market demand characterized by: P = 6300 - 32. Suppose the market is currently served by a large collection of firms all with constant marginal costs: MC = 4200. (a) 2 points What will be the initial price in this market? (b) 6 points Suppose one firm is able to innovate and drive their own costs down to MC = 3600. What price and quantity would this firm want to set to maximize profits as...
Suppose that a perfectly competitive firm manufactures gizmos with the following cost structure (including all opportunity...
Suppose that a perfectly competitive firm manufactures gizmos with the following cost structure (including all opportunity costs): Quantity of gizmos Total Cost ($) 0 75 1 150 2 250 3 425 4 675 a. calculate the marginal cost schedule for this firm in a table, and then graph the marginal cost curve. b. if the price of gizmos on the market is $175 each, how many gizmos should the firm produce to maximize profits? what is the level of the...
MC ATC Cost ($ per unit) ONWA0BB 9 10 Quantity The figure above gives the marginal...
MC ATC Cost ($ per unit) ONWA0BB 9 10 Quantity The figure above gives the marginal cost (MC) and average total cost (ATC) curves for a firm operating in a perfectly competitive market with a market price of $7. Use this figure to answer the questions below. a. What is the profit maximizing quantity of output? b. When profit is maximized, what is the economic profit?
Styles Paragraph Font 21. If a fim under perfect competition decreases its output a) The market...
Styles Paragraph Font 21. If a fim under perfect competition decreases its output a) The market price will decrease b) The market price will remain unaffected c) The market price will increase d) All of the above 22. By producing the quantity of output where marginal revenue (MR) equals marginal cost MC), a fim will a) Maximize total revenues b) Maximize economic profits e) Minimize costs d) Minimize revenues 23. The demand curve faced by the monopoly firm a) Is...
Suppose a firm producing table lamps has the following costs: Quantity 1,000 2,000 3,000 4,000 5,000...
Suppose a firm producing table lamps has the following costs: Quantity 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Average Total Cost $15.00 9.75 8.25 7.50 7.75 8.50 9.75 10.50 12.00 Ben and Jerry are managers at the company, and they have this discussion: Ben: We should produce 4,000 lamps per month because that will minimize our average costs. Jerry: But shouldn't we maximize profits rather than minimize costs? To maximize profits, don't we need to take demand into...
Question Completion Status: QUESTION 38 Marginal cost equals total cost divided by the quantity of output produced...
Question Completion Status: QUESTION 38 Marginal cost equals total cost divided by the quantity of output produced total output divided by the change in total cost the slope of the total cost curve the slope of the line drawn from the origin to the total cost curve QUESTION 39 wa firm produces nothing which of the following costs will be zero? - total cost faxed cost opportunity cost variable cost QUESTION 40 A production function is a relationship between Inputs...
Question 7 Not yet anwed Points out of 1.00 P Flag question If a perfectly competitive...
Question 7 Not yet anwed Points out of 1.00 P Flag question If a perfectly competitive firm is producing 2.500 units and, at the 2,500th unit, the difference between marginal revenue and marginal cost (MR-MC) POsitive, which of the following is true? Select one: A. The firm shouid increase production to maximize profit B. The 2,500th unit costs more to produce than the firm earns in revenue O C. The firm should decrease production to maximize proft D. The inm...
can you do question #2 1. Find the inflection point(s) for the function used in the inflation tax application M S =...
can you do question #2
1. Find the inflection point(s) for the function used in the inflation tax application M S = = me-(+)+aY 2. In the model of perfect competition, all firms are price-takers since they treat price as a market-determined constant. Firm Perfcomp's total revenue function is TR(9) = P Q, in which Pequals the output price. Assume that P = 12 and the total cost function TC(Q) = Q - 4.592 + 18Q - 7. (a) Determine...
3. Consider an industry with market demand characterized by: P = 6300 - 32. Suppose the market is currently served by a large collection of firms all with constant marginal costs: MC = 4200. (a) 2 points What will be the initial price in this market? (b) 6 points Suppose one firm is able to innovate and drive their own costs down to MC = 3600. What price and quantity would this firm want to set to maximize profits as...
MC ATC Cost ($ per unit) ONWA0BB 9 10 Quantity The figure above gives the marginal cost (MC) and average total cost (ATC) curves for a firm operating in a perfectly competitive market with a market price of $7. Use this figure to answer the questions below. a. What is the profit maximizing quantity of output? b. When profit is maximized, what is the economic profit?
Styles Paragraph Font 21. If a fim under perfect competition decreases its output a) The market price will decrease b) The market price will remain unaffected c) The market price will increase d) All of the above 22. By producing the quantity of output where marginal revenue (MR) equals marginal cost MC), a fim will a) Maximize total revenues b) Maximize economic profits e) Minimize costs d) Minimize revenues 23. The demand curve faced by the monopoly firm a) Is...
Suppose a firm producing table lamps has the following costs: Quantity 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Average Total Cost $15.00 9.75 8.25 7.50 7.75 8.50 9.75 10.50 12.00 Ben and Jerry are managers at the company, and they have this discussion: Ben: We should produce 4,000 lamps per month because that will minimize our average costs. Jerry: But shouldn't we maximize profits rather than minimize costs? To maximize profits, don't we need to take demand into...
Question Completion Status: QUESTION 38 Marginal cost equals total cost divided by the quantity of output produced total output divided by the change in total cost the slope of the total cost curve the slope of the line drawn from the origin to the total cost curve QUESTION 39 wa firm produces nothing which of the following costs will be zero? - total cost faxed cost opportunity cost variable cost QUESTION 40 A production function is a relationship between Inputs...
Question 7 Not yet anwed Points out of 1.00 P Flag question If a perfectly competitive firm is producing 2.500 units and, at the 2,500th unit, the difference between marginal revenue and marginal cost (MR-MC) POsitive, which of the following is true? Select one: A. The firm shouid increase production to maximize profit B. The 2,500th unit costs more to produce than the firm earns in revenue O C. The firm should decrease production to maximize proft D. The inm...
can you do question #2
1. Find the inflection point(s) for the function used in the inflation tax application M S = = me-(+)+aY 2. In the model of perfect competition, all firms are price-takers since they treat price as a market-determined constant. Firm Perfcomp's total revenue function is TR(9) = P Q, in which Pequals the output price. Assume that P = 12 and the total cost function TC(Q) = Q - 4.592 + 18Q - 7. (a) Determine...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago