The following table represents short run cost-revenue information (in dollars) for a firm in a competitive market.
Q
P
TR
MR
MC
TC
Total Profit
0
N/A
N/A
600
1
700
2
80
3
50
4
860
5
20
6
1000
7
1040
8
60
9
10
(a) Fill in all the blanks above using the following information: The Market Price is $100 per unit of output, the VC of producing 9 units of output is $570, and the ATC of producing 10 units of output is $270
(b) Where does diminishing returns start? Explain your answer.
(c) What is the Fixed Costs for this firm? Explain your answer.
(d) In the Short Run, if this firm would go into production, determine the profit maximizing (or loss minimizing) level of output and profit amount.
(e) In the Short Run, if this firm would instead shutdown without going into production, determine its production amount and profit amount.
(f) Please determine the best course of action for this firm in the Short Run.
(g) Based on the data above, in the Long Run, explain what this firm should do.
The following table represents short run cost-revenue information (in dollars) for a firm in a competitive market.
|
Q |
P |
TR |
MR |
MC |
TC |
Total Profit |
|
0 |
N/A |
N/A |
600 |
|||
|
1 |
700 |
|||||
|
2 |
80 |
|||||
|
3 |
50 |
|||||
|
4 |
860 |
|||||
|
5 |
20 |
|||||
|
6 |
1000 |
|||||
|
7 |
1040 |
|||||
|
8 |
60 |
|||||
|
9 |
||||||
|
10 |
(a) Fill in all the blanks above using the following information: The Market Price is $100 per unit of output, the VC of producing 9 units of output is $570, and the ATC of producing 10 units of output is $270
(b) Where does diminishing returns start? Explain your answer.
(c) What is the Fixed Costs for this firm? Explain your answer.
(d) In the Short Run, if this firm would go into production, determine the profit maximizing (or loss minimizing) level of output and profit amount.
(e) In the Short Run, if this firm would instead shutdown without going into production, determine its production amount and profit amount.
(f) Please determine the best course of action for this firm in the Short Run.
(g) Based on the data above, in the Long Run, explain what this firm should do.
Related textbook solutions
Related questions
Answer the following Questions for a Monopoly Firm.
| Price | Quantity | TR | MR | MC | TC | Profit |
| $400 | 0 | $2,000 | ||||
| 390 | 1 | $200 | ||||
| 380 | 2 | 2,360 | ||||
| 370 | 3 | 2,500 | ||||
| 360 | 4 | |||||
| 350 | 5 | 2,720 | ||||
| 340 | 6 | |||||
| 330 | 7 | 3,060 | ||||
| 320 | 8 | $250 | ||||
| 310 | 9 | 3,630 | ||||
| 300 | 10 | $400 | ||||
| 290 | 11 | $500 |
a) Fill in the missing information above for this Monopoly Firm. Note there are no numbers for MC and MR when Q=0.
To complete the table you need to know that the ATC of producing 4 units of output is $650 and that the Total Variable Cost of producing 6 units of output is $870.
b) State the Total Fixed Cost for this firm. Please explain how you got your answer.
c) At which unit of output does Diminishing Marginal Returns start? Please explain your answer.
d) If this firm produces in the Short Run, determine its profit maximizing/loss minimizing output level. Please explain your answer using MC and MR.
e) If this firm produces in the Short Run, determine its profit maximizing/loss minimizing price.
f) If this firm produces in the Short Run, state its profit maximizing/loss minimizing profit amount.
g) If this firm shuts down in the Short Run, determine its profit maximizing/loss minimizing profit amount. Please explain your answer.
h) What should this firm do in the Short Run in order to maximize its profits/minimize its loss (produce or shut down)? Please explain your answer using numbers.
i) Explain what this firm should do in the Long Run.
Assume that a firm in a perfectly competitive market can sell its product for $35 (ie price per unit of output). Furthermore, it faces the following costs:
| Output (Q) | Total Cost |
| 0 | 25 |
| 1 | 50 |
| 2 | 100 |
| 3 | 120 |
| 4 | 155 |
| 5 | 190 |
| 6 | 250 |
| 7 | 390 |
a) Calculate Total revenue (TR), Marginal Cost (MC), Fixed Cost (FC), Variable cost (VC), and Average Cost (AC).
b) What is the profit-maximizing output level?
c) Is this firm is making a profit or loss at the profit-maximizing output level? Explain.
d) Do you think the firm will continue its production in the short run?
e) What will be the long-run price in this market?
