To produce y units of a certain good in the short run, a firm incurs the...
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To produce y units of a certain good in the short run, a firm incurs the variable costs VC(y) = - %3D y? + 4y and the fixed costs FC = 4. The objective of the firm is maximizing profits. 1. What are the formulas for the total cost, the average cost, the marginal cost, the average variable cost, and the average fixed cost? 2. Draw the average total cost, the marginal cost, and the average variable cost on the same graph (you do not need to use a precise scale). Find at what quantity levels these fumctions achieve a minimum. Indicate the "shut down" and "break even" points. 3. The firm sells its product at a unit price equal to p. Find the production level corresponding to p = 3, when the firm maximizes its profit (= revenue - cost). Calculate the realized profit. To produce y units of a certain good in the short run, a firm incurs the variable costs VC(y) = - %3D y? + 4y and the fixed costs FC = 4. The objective of the firm is maximizing profits. 1. What are the formulas for the total cost, the average cost, the marginal cost, the average variable cost, and the average fixed cost? 2. Draw the average total cost, the marginal cost, and the average variable cost on the same graph (you do not need to use a precise scale). Find at what quantity levels these fumctions achieve a minimum. Indicate the "shut down" and "break even" points. 3. The firm sells its product at a unit price equal to p. Find the production level corresponding to p = 3, when the firm maximizes its profit (= revenue - cost). Calculate the realized profit.
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Managerial Economics and Strategy
ISBN: 978-0321566447
1st edition
Authors: Jeffrey M. Perloff, James A. Brander
Posted Date:
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