ECON-001 Midterm: ECON 001 Georgetown Test112013Akey
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The cost and revenue structures for the only producer of X, Inc., are shown in this table.
Quantity |
TVC |
TC |
TFC |
ATC |
MC |
Ā |
Price |
TR |
MR |
0 |
0 |
15 |
Ā |
---- |
---- |
Ā |
20 |
0 |
---- |
1 |
11 |
Ā | Ā | Ā |
11 |
Ā |
17.5 |
Ā | Ā |
2 |
Ā |
32 |
Ā | Ā | Ā | Ā | Ā |
30 |
Ā |
3 |
Ā |
36.6 |
Ā | Ā | Ā | Ā |
13.5 |
Ā | Ā |
4 |
25 |
Ā | Ā | Ā | Ā | Ā | Ā |
48 |
Ā |
5 |
Ā |
44.5 |
Ā | Ā | Ā | Ā |
10.5 |
Ā | Ā |
6 |
36 |
Ā | Ā | Ā | Ā | Ā |
9 |
Ā | Ā |
7 |
45.2 |
Ā | Ā | Ā | Ā | Ā |
8 |
Ā | Ā |
a. Using the formulas that you are familiar with complete the cost and revenue structure in the table.
b. What are the firm's fixed costs? ______
c. What is the firm's s profit maximizing position? P = _____, Q = _____.
d. At each price level is the demand for product X elastic or inelastic? How do you know?
e. What is the profit or loss at the equilibrium position?
f. Is this firm producing at the lowest possible ATC? At what output level is the minimum point on the ATC?
g. Why is the firm not producing at the cheapest output level?
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 |
Ā | Ā |
N/A |
N/A |
600 |
Ā |
1 |
Ā | Ā | Ā | Ā |
700 |
Ā |
2 |
Ā | Ā | Ā |
80 |
Ā | Ā |
3 |
Ā | Ā | Ā |
50 |
Ā | Ā |
4 |
Ā | Ā | Ā | Ā |
860 |
Ā |
5 |
Ā | Ā | Ā |
20 |
Ā | Ā |
6 |
Ā | Ā | Ā | Ā |
1000 |
Ā |
7 |
Ā | Ā | Ā | Ā |
1040 |
Ā |
8 |
Ā | Ā | Ā |
60 |
Ā | Ā |
9 |
Ā | Ā | Ā | Ā | Ā | Ā |
10 |
Ā | Ā | Ā | Ā | Ā | Ā |
(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.