I have done the charts can any one help me with the questions below.
c. Determine the profit maximizing level of output. Explain how you arrived at that conclusion.
d. What is the total profit at the profit maximizing level of output? How does that compare to profit at other levels of output?
e. What is the lowest price that Winsome Widgets will accept and continue to produce in the short run? Explain.
f. Is Winsome Widgets in long-run equilibrium? Explain
Consider the following table of costs for the Winsome Widget Factory, which operates in a perfectly competitive market. The market price faced by this firm is $6.00 per widget.
0
10
20
30
40
50
60
70
80
90
100
Total Fixed Cost
100
100
100
100
100
100
100
100
100
100
100
Total Variable Cost
0
50
80
100
140
200
275
375
500
650
900
Total Cost
$100
150
180
200
240
300
375
475
600
750
1,000
Average Fixed Cost
n/a
10
5
3.33
2.5
2
1.67
1.43
1.25
1.11
1
Average Variable Cost
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
Average Total Cost
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
Marginal Cost
n/a
50
30
20
40
60
75
100
125
150
250
Total Revenue
0
60
120
180
240
300
360
420
480
540
600
Marginal Revenue
n/a
60
60
60
60
60
60
60
60
60
60
Total Profit
-100
-90
-60
-20
0
0
-15
-55
-120
-210
-400
T Fixed Cost
100
100
100
100
100
100
100
100
100
100
100
Variable cost
50
80
100
140
200
275
375
500
650
900
AFC
n/a
10
5
3.33
2.5
2
1.67
1.43
1.25
1.11
1
AVC
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
AVC
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
MC
n/a
50
30
20
40
60
75
100
125
150
250
TR
0
60
120
180
240
300
360
420
480
540
600
MR
n/a
60
60
60
60
60
60
60
60
60
60
TP
-100
-90
-60
-20
0
0
-15
-55
-120
-210
-400
c. Determine the profit maximizing level of output. Explain how you arrived at that conclusion.
d. What is the total profit at the profit maximizing level of output? How does that compare to profit at other levels of output?
e. What is the lowest price that Winsome Widgets will accept and continue to produce in the short run? Explain.
f. Is Winsome Widgets in long-run equilibrium? Explain
c. Determine the profit maximizing level of output. Explain how you arrived at that conclusion.
d. What is the total profit at the profit maximizing level of output? How does that compare to profit at other levels of output?
e. What is the lowest price that Winsome Widgets will accept and continue to produce in the short run? Explain.
f. Is Winsome Widgets in long-run equilibrium? Explain
Consider the following table of costs for the Winsome Widget Factory, which operates in a perfectly competitive market. The market price faced by this firm is $6.00 per widget.
0
10
20
30
40
50
60
70
80
90
100
Total Fixed Cost
100
100
100
100
100
100
100
100
100
100
100
Total Variable Cost
0
50
80
100
140
200
275
375
500
650
900
Total Cost
$100
150
180
200
240
300
375
475
600
750
1,000
Average Fixed Cost
n/a
10
5
3.33
2.5
2
1.67
1.43
1.25
1.11
1
Average Variable Cost
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
Average Total Cost
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
Marginal Cost
n/a
50
30
20
40
60
75
100
125
150
250
Total Revenue
0
60
120
180
240
300
360
420
480
540
600
Marginal Revenue
n/a
60
60
60
60
60
60
60
60
60
60
Total Profit
-100
-90
-60
-20
0
0
-15
-55
-120
-210
-400
T Fixed Cost
100
100
100
100
100
100
100
100
100
100
100
Variable cost
50
80
100
140
200
275
375
500
650
900
AFC
n/a
10
5
3.33
2.5
2
1.67
1.43
1.25
1.11
1
AVC
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
AVC
n/a
5
4
3.33
3.5
4
4.58
5.36
6.25
7.22
9
MC
n/a
50
30
20
40
60
75
100
125
150
250
TR
0
60
120
180
240
300
360
420
480
540
600
MR
n/a
60
60
60
60
60
60
60
60
60
60
TP
-100
-90
-60
-20
0
0
-15
-55
-120
-210
-400
c. Determine the profit maximizing level of output. Explain how you arrived at that conclusion.
d. What is the total profit at the profit maximizing level of output? How does that compare to profit at other levels of output?
e. What is the lowest price that Winsome Widgets will accept and continue to produce in the short run? Explain.
f. Is Winsome Widgets in long-run equilibrium? Explain
Related textbook solutions
Related questions
Consider the following table of costs for the Winsome Widget Factory, which operates in a perfectly competitive market. The market price faced by this firm is $6.00 per widget.
| Output | Total Cost |
| 0 | 100 |
| 10 | 150 |
| 20 | 180 |
| 30 | 200 |
| 40 | 240 |
| 50 | 300 |
| 60 | 375 |
| 70 | 475 |
| 80 | 600 |
| 90 | 750 |
| 100 | 1,000 |
a. Fill in the formula for AFC, AVC, ATC, MC, TR, MR, and Total Profit.
b. Fill in the missing values for TFC, TVC, AFC, AVC, ATC, MC, TR, MR, and Total Profit.
Assignment 1 (10 points)
Willy's Widget, a monopoly, faces the following demand schedule (sales in widgets per month):
|
Price |
Quantity |
|
|
80 |
10 |
|
|
75 |
20 |
|
|
70 |
30 |
|
|
65 |
40 |
|
|
60 |
50 |
|
|
55 |
60 |
|
|
50 |
70 |
|
|
45 |
80 |
|
|
40 |
90 |
|
|
35 |
100 |
|
|
30 |
110 |
|
|
25 |
120 |
|
|
20 |
130 |
Calculate marginal revenue over each interval in the schedule. If marginal cost is constant at $38 and the fixed cost is $400, what is the profit-maximizing level of output? What is the level of profit? Explain your answer using marginal cost and marginal revenue.
Repeat the exercise for MC = $18
Assignment 2 (10 points)
The following diagram shows the cost structure of a monopoly firm as well as market demand. Identify on the graph and calculate the following:
Profit maximizing output level
Profit maximizing price
Total revenue
Total cost
Total profit or loss
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?
