What is the intuition behind why the shutdown price of a firm is where marginal cost...
What is the intuition behind why the shutdown price of a firm is where marginal cost = average variable cost?
Homework Answers
Average variable cost is the minimum cost required to cover the variable expenses incurred to run in short run during losses. Marginal cost is the additional cost incurred for producing a good, hence the intersection of AVC and MC, which shows the price where the firm would lack enough revenue to cover its variable cost is the shut down point.
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What is the intuition behind why the shutdown price of a firm is
where marginal cost...
Shutdown Price We have the following information for a competitive fim: Quantity Vaiable Cost Fixed Cost...
Shutdown Price We have the following information for a competitive fim: Quantity Vaiable Cost Fixed Cost 14 18 21 25 10 10 10 10 Part A: What is the marginal cost at each quantity supplied? (The variable cost in the table above is the total variable cost. The marginal cost is the difference in total variable cost between N and N-1 units. Note that the marginal cost curve is U-shaped: It is high at Q 1 andQ 8, and it...
If a perfectly competitive firm is producing where price is equal to $20, marginal cost is...
If a perfectly competitive firm is producing where price is equal to $20, marginal cost is equal to $25, and average variable cost is equal to $15, what should the firm do, if anything, to maximize its profit? O A. increase output O B. shut down O C. decrease output (but not shut down) OD. The firm is already maximizing profit.
need help with 5 and 6 Suppose a perfectly competitive firm's cost function is C(q)-4q*+16. Marginal cost for the firm...
need help with 5 and 6
Suppose a perfectly competitive firm's cost function is C(q)-4q*+16. Marginal cost for the firm is given by MC=8q. 1) Find equations for variable cost, fixed cost, average total cost, average variable cost and average fixed cost for this firm. Illustrate on a graph the firm's average variable cost curve, average total cost curve, and marginal cost curve. 2) Find the outputs that minimize average total cost, average variable cost and average fixed cost. 3)...
4. The total cost function of a firm is TC = 10+ 2Q-0.2Q2+0.01Q3. The price of...
4. The total cost function of a firm is TC = 10+ 2Q-0.2Q2+0.01Q3. The price of the output is $6. a) What is the marginal cost function of the firm? b) What are the total and total variable cost functions and the average total cost function of the firm? c) What are the fixed costs of the firm? d) What is the profit maximizing rate of output? What are the profits? How do you know the rate of output maximizes...
Under the cartel model, each firm produces where Group of answer choices marginal cost equals marginal...
Under the cartel model, each firm produces where Group of answer choices marginal cost equals marginal revenue. price equals marginal cost. the average cost curve is at a minimum. price exceeds marginal cost by the greatest amount.
Part 1 At a market price of $7, what is the Marginal Revenue for this firm? At a market price of...
Part 1
At a market price of $7, what is the Marginal Revenue for this
firm?
At a market price of $7, what is the Average Revenue for this
firm?
At a price of $7 how many units will this firm produce in the
short run to maximize profit? (Round off your answer to the nearest
100 units)
What is the cost per unit? (See ATC)
What will be its profit or loss per unit?
Part 2
At a market...
4. A firm will begin to experience diminishing returns at the output where marginal A. cost...
4. A firm will begin to experience diminishing returns at the output where marginal A. cost increases B. cost decreases. C. product increases. D. both B and C 5. Marginal cost is average variable cost when A. equal to; average total cost is minimized B. less than; total cost is maximized C. greater than; average fixed cost is minimized D. equal to; average variable cost is minimized. 6. Assume Dell Computer Company operates in a perfectly competitive market producing 5,000...
8. In the short run, a perfectly competitive firm will shut down if it is producing...
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...
What is the intuition behind choosing a variable when applying a change of variables in order...
What is the intuition behind choosing a variable when applying a change of variables in order to solve a PDE? (E.G u=u(x,y)) In other words what are the criteria in choosing our variable?
If a perfectly competitive firm is producing at a rate output where marginal cost exceeds price...
If a perfectly competitive firm is producing at a rate output where marginal cost exceeds price how can a firm increase its profit?
Shutdown Price We have the following information for a competitive fim: Quantity Vaiable Cost Fixed Cost 14 18 21 25 10 10 10 10 Part A: What is the marginal cost at each quantity supplied? (The variable cost in the table above is the total variable cost. The marginal cost is the difference in total variable cost between N and N-1 units. Note that the marginal cost curve is U-shaped: It is high at Q 1 andQ 8, and it...
If a perfectly competitive firm is producing where price is equal to $20, marginal cost is equal to $25, and average variable cost is equal to $15, what should the firm do, if anything, to maximize its profit? O A. increase output O B. shut down O C. decrease output (but not shut down) OD. The firm is already maximizing profit.
need help with 5 and 6
Suppose a perfectly competitive firm's cost function is C(q)-4q*+16. Marginal cost for the firm is given by MC=8q. 1) Find equations for variable cost, fixed cost, average total cost, average variable cost and average fixed cost for this firm. Illustrate on a graph the firm's average variable cost curve, average total cost curve, and marginal cost curve. 2) Find the outputs that minimize average total cost, average variable cost and average fixed cost. 3)...
Part 1
At a market price of $7, what is the Marginal Revenue for this
firm?
At a market price of $7, what is the Average Revenue for this
firm?
At a price of $7 how many units will this firm produce in the
short run to maximize profit? (Round off your answer to the nearest
100 units)
What is the cost per unit? (See ATC)
What will be its profit or loss per unit?
Part 2
At a market...
4. A firm will begin to experience diminishing returns at the output where marginal A. cost increases B. cost decreases. C. product increases. D. both B and C 5. Marginal cost is average variable cost when A. equal to; average total cost is minimized B. less than; total cost is maximized C. greater than; average fixed cost is minimized D. equal to; average variable cost is minimized. 6. Assume Dell Computer Company operates in a perfectly competitive market producing 5,000...
8. In the short run, a perfectly competitive firm will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is A. Greater than average total cost. B. Less than average total cost. C. Greater than average variable cost. D. Less than average variable cost E. None of the above 10. Given your answer to Question 8, what can you say about Hanna's firm: A. It should continue operating...
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