f. Finally, label the area that shows the net change in welfare. Is this a net positive or a net negative? brognor o 4. Consider a profit-maximizing, perfectly-competitive firm in the short run. a. Carefully define what we mean by the short run. bis () dillup ano hdili b. Draw a diagram for this firm using the more realistic or complicated case (where the law of diminishing returns does not begin immediately) consisting of an average variable cost curve (AVC), an average total cost curve (ATC), and a marginal cost curve (MC). muindiliups c. In this diagram, draw in a price (P) or marginal revenue (MR) line for which the firm is earning positive economic profits. Carefully label the profit rectangle. pisric d. In a new diagram, draw in a P/MR line for which the firm is earning negative s economic profits but positive profits on operation. Carefully label the profits on operation rectangle. 100 od bas e. For the diagram in 4d, please carefully explain why the firm might continue to produce despite the negative profits. wode bns 1= -4 in boilgquz Spnilis g sdt moil alues e msb 2290x9 1o nuoms ordt at sdW

f. Finally, label the area that shows the net change in welfare. Is this a net positive or a net negative? brognor o 4. Consider a profit-maximizing, perfectly-competitive firm in the short run. a. Carefully define what we mean by the short run. bis () dillup ano hdili b. Draw a diagram for this firm using the more realistic or complicated case (where the law of diminishing returns does not begin immediately) consisting of an average variable cost curve (AVC), an average total cost curve (ATC), and a marginal cost curve (MC). muindiliups c. In this diagram, draw in a price (P) or marginal revenue (MR) line for which the firm is earning positive economic profits. Carefully label the profit rectangle. pisric d. In a new diagram, draw in a P/MR line for which the firm is earning negative s economic profits but positive profits on operation. Carefully label the profits on operation rectangle. 100 od bas e. For the diagram in 4d, please carefully explain why the firm might continue to produce despite the negative profits. wode bns 1= -4 in boilgquz Spnilis g sdt moil alues e msb 2290x9 1o nuoms ordt at sdW

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 3P

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If You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year. then your economic profit is Select one: a. 10,000 O b.-10,000 O c. -40,000 O d. 20,000 O e. 40,000
(b) You are the CEO for a lightweight compasses manufacturer. The demand function for the lightweight compasses is given by p = 40 – 4q²where q is the number of lightweight compasses produced in millions. It costs the company $15 to make a lightweight compass. (i) Write an equation giving profit as a function of the number of lightweight compasses produced. (ii) At the moment the company produces 2 million lightweight compasses and makes a profit of $18,000,000, but you would like to reduce production. What smaller number of lightweight compasses could the company produce to yield the same profit? Problem з
Suppose the market for fresh pork is a competitive market. Initially, it is operatingat its long-run competitive equilibrium at a market price of $50.Owing to the spread of COVID-19, many people turn to buying frozen meat oncea week rather than fresh pork every day. As a result, the market price of fresh porkreduces to $30.a. With the aid of a pair of market-and-firm diagrams, illustrate how thiswould affect the equilibrium price and quantity in the fresh pork market andthe output of a typical butcher of fresh pork in the short-run.b. Suppose, for the situation in (a), the average cost of a typical butcher offresh pork is $40, which includes $15 on buying meat from suppliers, $12on paying rent, $8 on paying hourly wages on staff, and $5 on other costs.Explain whether a typical butcher should shut down in the short run.
Based on the above graph, which statement better explains the slope of the total revenue? $ costs O 0 TC TR web page designs a) The slope of the total revenue curve is revealed by the cost of the product produced. b) Both a and b above can be used to explain the slope of the total revenue curve. c) As output rises, decreasing returns will cause total costs to sharply decelerate. d) A perfectly competitive business is indicated by total revenue displayed as a straight-line sloping upward.
er 11 i Suppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be Multiple Choice OO O the same as the initial equilibrium price, but the new industry output will be greater than the original output. greater than the initial price, and the new industry output will be greater than the original output. less than the initial price, but the new industry output will be greater than the original output. the same as the initial equilibrium price, and the industry output will remain unchanged. 23 11,229 X OCT all Z A
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