for a firm with price in excess of average total cost, the presence of ecomonics profits implies that the firm should increase output in the short runeven if the price is below marginal cost . true or false explain
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for a firm with price in excess of average total cost, the presence of ecomonics profits implies that the firm should increase output in the short runeven if the price is below marginal cost . true or false explain
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- The figure shows a bakery's marginal and average cost curves, and its isoprofit curves. The bakery is a price-taker in a large bread market. Suppose the current market price is P₁. Based on this information, which of the following statements is correct? Price, Cost €6 (5 20 40 60 80 Quantity MC hoprofits AC 100 120 140 160 180 number of loaves Select one or more: a. The bakery would be better off raising its price up to its AC level. O b. The bakery would be minimising its loss at A. Oc. If the bakery is not yet in the market then it would not enter the market. d. If the bakery is already in the market, then it would always immediately exit the market because it is making a loss.A firm has a linear demand function for its product. When the price of the product isSh.220, the quantity demanded is 40 units. When the price increases to Sh.240, thequantity demanded becomes 30 units. In addition, the firm’s marginal cost function isgiven by:MC = 40q – 2q2 + 2Fixed cost = Sh.5 millionWhere q = quantity demanded, MC = marginal cost (Sh. million)Evaluate the level of output that maximizes profits.The demand and total profit function, P(x) for rooms in a hotel are given as follows. 3x = 600 - P P(x) = 450x – 3.5x2 - 4000 Where p is the price in ringgit per room and x is the quantity of room rented. Determine the marginal cost when 2 rooms are rented
- A local company is planning to manufacture and market a four-slice toaster. For this toaster, the research department’s estimates are aweekly demand of 300 toasters at a price of $25 per toaster and a weekly demand of 400 toasters at a price of $20. The financial department’s estimates are fixed weekly costs of$5,000 and variable costs of $5 per toaster. a) Assume that the relationship between price ? and demand ? is linear. Use the research department’s estimates to express ? as a function of ? and determine the domain of the function. b) Using your knowledge from Finite Math, determine the Revenue function in terms of ?. c) Determine the Marginal Revenue at 2 different production levels for example 250 and 500 units. Interpret these results. (HINT: Consider what a positive or negative first derivative implies) d) Assume that the cost function is linear. Use the financial department’s estimates to express the cost function interms of ?. e) Determinethe Marginal costand interpret the…Suppose the firm achieves total revenue of $1,000 by selling 150 units while facing total costs of $900. If the firm produces and sells 151 units, its total revenue is $1,005, and its total costs are $950. Should the firm produce and sell the extra unit? Group of answer choices yes, since marginal profit is positive yes, since profits are positive no, since marginal profit is negative no, since marginal profit is positive You have recently learned that the company where you work is being sold for $1,000,000. The company's income statement indicates next year's profits of $30,000, which have yet to be paid out as dividends. Assuming the company will remain a "going concern" indefinitely and the interest rate will remain constant at 7%, at what (constant) rate does the owner believe that profits will grow? (Hint: the price the owner was willing to pay is the present value of the firm's future cash flows) Group of answer choices 6% 5% 4% 4.5%depict a ATC curve, one where the firm has negative profits(π < 0) at the profit maximizing output of 1000. Add an additional average cost curve that will allow you to determinewhether to shutdown or keep producing at Q = 1000.
- Tim Marlow, the owner of The Clock Works, wanted to know how many clocks he must sell in order to cover his fixed cost at a given price. Tim knew that he had a fixed cost of $20,000 for equipment, taxes, and a bank loan. He also had a unit variable cost of $20 per clock for labor, materials, and promotional costs. If the price Tim charges for each of his clocks is $40, what is his break-even point quantity?Douglas Fur is a small manufacturer of fake-fur boots in New York City. The following table shows the company’s total cost of production at various production quantities.A profit-maximising firm in a competitive market is currently producing 1,000units of output. It has average revenue of $50, average total cost of $40 and fixed cost of $10,000.a) What is its profit?b) What is its marginal cost?c) What is its average variable cost? Is the efficient scale of the firm more than, less than or exactly 1,000 units?
- A company produces very unusual CD's for which the variable cost is $ 15 per CD and the fixed costs are $ 50000. They will sell the CD's for $ 79 each. Let a be the number of CD's produced. Write the total cost C as a function of the number of CD's produced. C =$ Write the total revenue R as a function of the number of CD's produced. R=$ Write the total profit P as a function of the number of CD's produced. P=$ Find the number of CD's which must be produced to break even. The number of CD's which must be produced to break even is Question Help: Video Submit QuestionThe figure deplcts the demand curve for Beautiful Cars, and the marginal cost and Isoprofit curves of the car manufacturer. The quantity and price at polnt E are (Q*. P*) - (30, 5,500). Suppose now that the firm Increases the price to 5,550 and chooses the corresponding level of output from the demand function at the new price. Based on this Information, whlch of the following Is correct? 8,000 Demand curve 100 Quantity of cars, O O The firm will sell 30 cars at the higher price. O The firm's profit remains the same. O The quantity of cars produced reduced. O Tho firm's profit is now incroasod Price, Marginal cost ($)Price and cost (dollars) 70 60 50 40 30 20 10 0 MC₁ 50 Quantity MC₂ 100 Demand 150 The demand for dishwashers facing the AllClean Co. is given in the figure above. The firm manufactures dishwashers in two plants. MC₁ and MC2 are the marginal cost curves for those two plants. How should the firm allocate total output between the two plants in order to maximize profit?