ECON 10010 Lecture Notes - Lecture 13: Demand Curve, Arkansas Highway 5, Deadweight Loss

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periwinklechimpanzee451

7 Nov 2017

School

Department

Economics

Course

ECON 10010

Professor

Kirk Doran

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Document Summary

Mc = derivative of tc in respect to q. Afc: price in a competitive market is determined by the following constraints. Q2: the firm"s change from q1 to q2 doesn"t affect the market supply nor the. Market price: price as a function of q = price is constant in competitive markets, tr is the total money you bring in. Q2: in the firm"s graph, this quantity is localized at the intersection of mr and. All of these can be seen in the next page. The green line segment represents the marginal profit. Q: the area inside the rectangle gives the total profit. Rectangle: when there are high prices in the market and the firm has a positive profit, it is in the short-run, example. P = tc(q) = 12 + 4q + 3q2. Find q* that maximizes profit: find the derivative of profit (marginal profit)

Related Questions

Could you please ensure the data entered is correct? Thank you

Orginal Question:

Q * (Fields)	Price Per Ton	TR	MR Per Ton	FC	VC	TC	Profit or loss	AFC Per Ton	AVC Per Ton	ATC Per Ton	MC Per Ton
0	$40.00				$ 0
1	$40.00				24,000	$59,000
2	$40.00				40,000
3	$40.00				60,000
4	$40.00				85,000
5	$40.00					$156,000
6	$40.00				169,000
7	$40.00				221,000
8	$40.00				286,000

Filled in table, that I am requesting to be double checked:

Q * (Fields)	Price Per Ton	TR	MR Per Ton	FC	VC	TC	Profit or loss	AFC Per Ton	AVC Per Ton	ATC Per Ton	MC Per Ton
Q	P	P â¢ Q	ÎTR/ÎQ			FC+VC	TR-TC	FC/Q	TVC/Q	TC/Q	ÎTC/ÎQ
0	$40.00	$0	-	$0	$0	$0	$0	$0	$0	$0	$0
1	$40.00	40,000	$40	35,000	24,000	$59,000	-19,000 (Loss)	35,000	24,000	59,000	59,000
2	$40.00	80,000	40	35,000	40,000	75,000	5,000 (Profit)	17,500	20,000	37,500	16,000
3	$40.00	120,000	40	35,000	60,000	95,000	25,000 (Profit)	11,667	20,000	31,667	20,000
4	$40.00	160,000	40	35,000	85,000	120,000	40,000 (Profit)	8,750	21,250	30,000	25,000
5	$40.00	200,000	40	35,000	121,000	$156,000	44,000 (Profit)	7,000	24,200	31,200	36,000
6	$40.00	240,000	40	35,000	169,000	204,000	36,000 (Profit)	5,833	28,167	34,000	48,000
7	$40.00	280,000	40	35,000	221,000	256,000	24,000 (Profit)	5,000	31,571	36,571	52,000
8	$40.00	320,000	40	35,000	286,000	321,000	-1,000 (Profit)	4,375	35,750	40,125	65,000

Answer the following questions pertaining to the graph.

1. What is the shape of the AVC and ATC curves? What economic law accounts for this shape? How do you know this?

2. What is the shape of the MC curve? Why does it have this shape? How do you know this?

3. What do you know about the values of AVC and ATC at the points where MC crosses them?

4. Is the AVC higher than the ATC or lower than it? How do you know this?

5. Is the costs in the short run or the long run? How do you know this?

6. Assume the company above is in a Perfect Competition Industry: If the price of the product is $20 that is sold at, what will be the profits and how many will be sold at that price? Can the company raise the price?

7. Again in a Perfect Competition Industry: What would the profit situation be at a price of $30, how much to sell at that price?

8. With the Perfect Competition industry: What would the profit situation be at a price of $10, how much to sell at that price?

9. What are the characteristics of a perfect competition company and industry?

Following is the complete table -

Q	FC	VC (TC-FC)	TC	AFC (FC/Q)	AVC (VC/Q)	ATC (TC/Q)	MC (TC_n-TC_n-1)
0	10	0	10	-	-	-	-
1	10	10	20	10	10	20	10
2	10	18	28	5	9	14	8
3	10	23	33	3.33	7.67	11	5
4	10	33	43	2.5	8.25	10.75	10
5	10	48	58	2	9.6	11.6	15
6	10	68	78	1.67	11.33	13	20
7	10	98	108	1.43	14	15.42	30
8	10	148	158	1.25	18.5	19.75	40

coralcamel331

Alex Lopez & Sons, Inc. A hydroponic farm with eight greenhouses for producing tomatoes in a perfectly competitive

industry competing with other greenhouse growers and field producers in the U.S.

and Mexico. (In the short run).

Part I. Compute the values for the blank cells.

Q * Green- houses/ lbs. of Tomatoes	Expected Wholesale Market Price/ Per lb.	TR	MR Per/lb.	FC	VC	TC	$ Profit or loss	AVC Per/lb.	ATC Per/lb.	MC Per/lb.
0/0	$ .80				$ 0
1/ 25,000	$. 80				15,000	$ 37,000
2/ 50,000	$ .80				25,000
3/ 75,000	$ .80				27,000
4/ 100,000	$ .80				30,000
5/ 125,000	$ .80					$ 57,000
6/ 150,000	$ .80				48,000
7/ 175,000	$ .80				66,000
8/ 200,000	$ .80				99,000

* Experience indicates that their yield is 25,000 lbs. of tomatoes per greenhouse. Therefore, for all per lb. computations, use thousands for Q

in the formulas, e.g. 25,000, 50,000, 75,000 etc. lbs. - instead of 1, 2, 3 etc. greenhouses.

salmonseal450

ECON 10010 Lecture Notes - Lecture 13: Demand Curve, Arkansas Highway 5, Deadweight Loss

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