Question

1) A perfectly competitive firm that sells fish has a marginal cost function given by MC = 3q. The market has determined a price of P = 60. How many fish will this firm produce?

2)See the previous question about the perfectly competitive fish firm. Suppose that at this level of output, the firm has average costs of production of ATC = 42. How much total economic profit will the firm earn?

3) A perfectly competitive firm will shut down in the short run if

P > minimum ATC

P = minimum ATC

P > minimum AVC and P < minimum ATC

P < minimum AVC

4) Suppose a perfectly competitive firm has a total cost
function of TC = 2q^{2} + 5q + 128.

Therefore, the firm’s marginal cost function is MC = 4q + 5.

What is the break-even price for this firm?

Answer #1

1) Use P = MC or 60 = 3q. This gives q = 20. Hence, the firm produces 20 fishes

2) When q is 20, average costs of production of ATC = 42. Economic profit = (60 - 42)*20 = $360

3) A perfectly competitive firm will shut down in the short run if P < minimum AVC

4) ATC = TC/q = 2q + 5 + 128/q and marginal cost function is MC = 4q + 5.

At the break-even price for this firm, P = MC = AC

2q + 5 + 128/q = 4q + 5

128/q = 2q

q = 64^0.5

= 8

Hence break even price is 4*8 + 5 = $37.

Let’s assume a wheat flour factory is perfectly competitive and
the given price of wheat per kg is $20. State the condition and
identify when the firm maximizes profit. Also, calculate profit at
the profit maximizing level of output.
Output of Wheat (kg)
Total Cost ($/kg)
Total Revenue
Marginal Revenue
Average Revenue
Marginal Cost
0
20
1
32
2
42
3
47
4
60
5
80
6
120
The market for widgets are perfectly competitive.
TC = 2q2 + 5q...

A perfectly competitive firm has the following total cost and
marginal cost functions:
TC = 100 +
10q – q2 + (1/3)q3
MC =
q2 – 2q +10
a) For quantities
from 0 to 10 determine: TC, TFC, TVC, and MC.
b) For quantities
from 0 to 10 determine: ATC, AFC, and AVC.
c) Assume P (MR)
equals 45. For quantities from 0 to 10 determine: TR and
profit.
d) At what quantity is
profit maximized?...

A perfectly competitive firm in the short run has Total Cost and
Marginal Cost functions given by TC(Q)=9+Q+Q2 and
MC(Q)=1+2Q, respectively. The firm faces a price of P=$17.
Determine the output that the firm will produce and the profit.
Show the solution graphically.

10. Suppose a perfectly competitive firm has the following total
cost function: TC = 10 + (0.1 ∗ q^2). The market demand is given by
Q = 100 – 10p. If p = 10, the firm's profits will be
A) 240.
B) 250.
C) 260.
D) -10 because the firm will shut down.

consider a firm operating a perfectly competitive industry and
suppose that this firm's total cost function is: TC=10+2q+5q^2. if
p=12, which of the following statements is correct:
a) The firm is making profits
b) total revenue of this firm is 2
c) total cost of this firm is 17
d) none of the other answers

A perfectly competitive firm’s total cost function is given
by: TC = 400+4Q^2 . The minimum point of average total cost (ATC)
is reached at Q=10. You also know that the market demand function
for this product is: QD=100-P. How many firms are in the market in
the long-run? (Hint: first you need to find the price in the
long-run)
Select one:
a. N=6
b. N=4
c. N=2
d. None of the above

assume that a perfectly competitive firm has MC=AVC=$12,
MC=ATC=$20, and MC=MR=$24. On the basis of this information, can we
tell what level of output will the firm choose? Is the firm making
a profit? Is the firm making a rent?

Fill in the table for a perfectly competitive firm.
Output
VC
TC
AVC
AFC
ATC
MC
P
TR
PROFIT
0
100
---
---
---
---
50
1
25
50
2
20
3
53.3
4
17.5
5
90
6
30
7
265
8
41.3
9
35
10
425
A perfectly competitive firm’s demand curve is perfectly
elastic.

Suppose a perfectly competitive firm has marginal and total
costs given by M C = 3 + 2q and T C = 2 + 3q + q2, respectively,
where q is the quantity of output produced by the firm. In a
monetary union the firm faces a constant price p1 = 9 for its
product. Outside of the monetary union with a flexible exchange
rate it faces a 50-50 chance of p2 = 11 or p3 = 7. The firm...

Assume the following is true for a perfectly competitive firm.
At the output where MR = MC, ATC > P. Based on this information,
which of the following is correct?
1. More information is needed to know if the firm is in the
short run or long run and if it should shut down.
2. The firm is definitely in the short run and should shut
down.
3. The firm is definitely in the long run and should shut
down....

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 6 minutes ago

asked 6 minutes ago

asked 10 minutes ago

asked 12 minutes ago

asked 12 minutes ago

asked 12 minutes ago

asked 16 minutes ago

asked 16 minutes ago

asked 16 minutes ago

asked 16 minutes ago

asked 16 minutes ago