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  3. Liberty ECON 213 Problem Set Ch. 9 Answers Complete Solutions

Liberty ECON 213 Problem Set Ch. 9 Answers Complete Solutions

 

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The total cost of Mr. Plow, a snow-removal business, is given in the table below. What is the total profit of cleaning five driveways if the price Mr. Plow can charge is $10 per driveway?

The firm is making an economic profit at

The firm is breaking even (making zero profit) at

The firm is experiencing an economic loss at

A firm is experiencing a loss of $5,000 per year. The firm has fixed costs of $8,000 per year

(a) The firm should in the short run.

(b) The firm should in the long run.

Suppose you are the owner of a firm producing jelly beans. Your production costs are shown in the table.

Initially, you produce 100 boxes of jelly beans per time period. Then a new customer calls and places an additional order for jelly beans, requiring you to increase your output to 101 boxes. She offers you $1.75 for the additional box. Should you produce it?

The graph shows the cost curves of a firm in a competitive industry. The market price is $4. In the short run, the firm should

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The graph shows the cost curves of a firm in a competitive industry. Assume that all firms in the industry have identical cost curves. The price in this market in the long run is

The graph below shows a particular firm’s marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves, where the market is competitive. Suppose that a new management team is brought in and that this team is initially less concerned about maximizingprofits than it is simply about making a profit. What range of production quantities will allow the firm to operate while earning a profit? Give your answer by dragging the Qmin to Qmax lines into their correct positions. The output will need to lie somewhere betwen those limits.

A competitive firm maximizes profit at an output level of 500 units, market price is $36.00, and ATC is $36.95. At what range of AVC values for an output level of 500 would the firm choose notto shut down in the short run?

In the short run, profits when a competitive firm shuts down are -$8050, and they are -$600 when the firm continues to produce. This firm will minimize losses in the short run by

What are the firm’s fixed costs?

Suppose that Katy sells egg rolls. The total cost of production, based on the number of egg rolls produced, is shown in the following table.

Suppose that the price is $6. Assuming profit maximization, how many egg rolls will Katy sell?

The graph below shows a particular firm’s marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves, where the market is competitive. Management wants to adjust the production output quantity to maximize the firm’s profits. What quantity should the firm aim for? Give your answer by dragging the Q line to a new position to mark the quantity at which profit is as large as possible.

The graph below shows the marginal cost (MC), average variable cost (AVC), and average total cost (ATC) curves for a firm in a competitive market. These curves imply a short-run supply curvethat has two distinct parts. One part, not shown, lies along the vertical axis (quantity = 0); this represents a condition of production shutdown. Where is the other part? Use the straight-line tool to draw it.

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