Assume that the cost data in the following table are for a purely competitive producer:
Total Average Average Average Marginal
Product Fixed Cost Variable Cost Total Cost
1 $60.00 $45.00 $105.00 $45
2 30.00 42.50 72.50 40
3 20.00 40.00 60.00 35
4 15.00 37.50 52.50 30
5 12.00 37.00 49.00 35
6 10.00 37.50 47.50 40
7 8.57 38.57 47.14 45
8 7.50 40.63 48.13 55
9 6.67 43.33 50.00 65
10 6.00 46.50 52.50 75
a. At a product price of $56, what quantity of production will maximize profit? Explain. What is the profit (or loss) per unit at that level of output?
b. Answer the questions of part a assuming product price is $41.
c. Answer the questions of part a assuming product price is $32.
Assume that the cost data in the following table are for a purely competitive producer:
Total Average Average Average Marginal
Product Fixed Cost Variable Cost Total Cost
1 $60.00 $45.00 $105.00 $45
2 30.00 42.50 72.50 40
3 20.00 40.00 60.00 35
4 15.00 37.50 52.50 30
5 12.00 37.00 49.00 35
6 10.00 37.50 47.50 40
7 8.57 38.57 47.14 45
8 7.50 40.63 48.13 55
9 6.67 43.33 50.00 65
10 6.00 46.50 52.50 75
a. At a product price of $56, what quantity of production will maximize profit? Explain. What is the profit (or loss) per unit at that level of output?
b. Answer the questions of part a assuming product price is $41.
c. Answer the questions of part a assuming product price is $32.
Related textbook solutions
Related questions
Assume that the cost data in the table below are for a purely competitive producer:
|
Total Product |
Average Fixed Cost |
Average Variable Cost |
Average Total Cost |
Marginal Cost |
|
0 |
Ā | Ā | Ā | Ā |
|
1 |
$60.00 |
$45.00 |
$105.00 |
$45 |
|
2 |
30.00 |
42.50 |
72.50 |
40 |
|
3 |
20.00 |
40.00 |
60.00 |
35 |
|
4 |
15.00 |
37.50 |
52.50 |
30 |
|
5 |
12.00 |
37.00 |
49.00 |
35 |
|
6 |
10.00 |
37.50 |
47.50 |
40 |
|
7 |
8.57 |
38.57 |
47.14 |
45 |
|
8 |
7.50 |
40.63 |
48.13 |
55 |
|
9 |
6.67 |
43.33 |
50.00 |
65 |
|
10 |
6.00 |
46.50 |
52.50 |
75 |
- a. At a product price of $56, will this firm produce in the short run? It is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output?
- b. Answer question 2a assuming the product price is$41.
- c. Answer question 2a assuming the product price is$32.
- d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3).
|
(1) Price |
(2) Quantity Supplied, Single Firm |
(3) Profit (+) Or Loss (-) |
(4) Quantity Supplied 1500 Firms |
|
$26 |
Ā |
$ |
Ā |
|
32 |
Ā | Ā | Ā |
|
38 |
Ā | Ā | Ā |
|
41 |
Ā | Ā | Ā |
|
46 |
Ā | Ā | Ā |
|
56 |
Ā | Ā | Ā |
|
66 |
Ā | Ā | Ā |
- e. Now assume that there are 1500 identical firms in this competitive industry; that is, there are 1500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4).
- f. Suppose the market demand data for the product are as follows:
|
Price |
Total Quantity Demanded |
|
$26 |
17,000 |
|
32 |
15,000 |
|
38 |
13,500 |
|
41 |
12,000 |
|
46 |
10,500 |
|
56 |
9,500 |
|
66 |
8,000 |
What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?
