Homework Assignment 5 (Chapter... i Saved Help Save & Exit Submi Consider a profit-maximizing firm in a competitive industry. Under which of the following situations would the firm choose to produce where MR = MC? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the 1.53 option twice to empty the box. points 2 Minimum AVC minimum ATC. ? P HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit 2 Check my work A purely competitive firm finds that the market price for its product is $20. It has a fixed cost of $100 and a variable cost of $17.50 per unit for the first 50 units and then $25 per unit for all successive units. 1.53 points Instructions: Enter your answers rounded to two decimal places. a. Does price exceed average variable cost for the first 50 units? eBook (Click to select) What is the average variable cost for the first 50 units? Print $1 per unit References b. Does price exceed average variable cost for the first 100 units? (Click to select) ! What is the average variable cost for the first 100 units? $ per unit c. What is the marginal cost per unit for the first 50 units? $ per unit The marginal cost for units 51 and higher? $ per unit d. For each of the first 50 units, does MR exceed MC? (Click to select) Is MR > MC for units 51 and higher? (Click to select) e. What output level will yield the largest possible profit for this purely competitive firm? units 2 of 13 Next > Mc rawHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 4 Latoya runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1 per poster. She has fixed costs of $500. Her variable costs are $1,500 for the first thousand posters, $1,200 for the second thousand, and then $800 1.53 for each additional thousand posters. points Instructions: Enter your answers rounded to two decimal places. a. What is her AFC per poster (not per thousand!) if she prints 1,000 posters? eBook Print What if she prints 2,000 posters? $[ References What if she prints 10,000 posters? b. What is her ATC per poster if she prints 1,000? $ 1 What if she prints 2,000? $ 1 What if she prints 10,000? $ c. If the market price fell to 75 cents per poster, would there be any output level at which Latoya would not shut down production immediately? (Click to select) Mc Graw HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 5 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 Cost 1.53 points $ 60 $ 45 $ 105 $ 45 2 30 42.5 72.5 40 20 40 60 35 15 37.5 2.5 30 5 12 37 49 35 Book 6 10 37.5 47.5 40 ovo 8.57 38.57 17 . 14 45 8 7.5 10.63 48 . 13 55 9 6. 67 13.33 50 65 Print 19 6 46.5 52.5 75 Instructions: If you are entering any negative numbers, be sure to include a negative sign (-) in References front of those numbers. Select "Not applicable" and enter a value of "O" for output if the firm does not produce. a. At a product price of $67 i. Will this firm produce in the short run? ( (Click to select) ) li. If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? (Click to select) output = units per firm ili. What economic profit or loss will the firm realize per unit of output? (Click to select) ) per unit = $[ b. At a product price of $42 i. Will this firm produce in the short run? ((Click to select)_) ii. If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? (Click to select) output = [units per firm iii. What economic profit or loss will the firm realize per unit of output? ((Click to select) ) per unit = $ [ c. At a product price of $33 i. Will this firm produce in the short run? ((Click to select) ) ii. If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Mc Graw HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 5 (Click to select) + output = units per firm iii. What economic profit or loss will the firm realize per unit of output? ( (Click to select) . ) per unit = $[ 1.53 points Instructions: Enter your answers as a whole number. If you are entering any negative numbers, be sure to include a negative sign (-) in front of those numbers. d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and Book indicate the profit or loss incurred at each output (column 3). (2) Quantity Print (1) Price Supplied, (3) Profit (+) or (4) Quantity Supplied, 1,500 Single Firm Loss (-) Firms $23 References 28 33 39 44 48 58 e. Now assume that there are 1,500 identical firms in this competitive industry. That is, there are 1,500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4 in the table above). f. Suppose the market demand data for the product are as follows: Total Quantity Price Demanded $ 23 19, 000 28 17, 000 33 15, 000 39 13, 500 44 12, 000 48 10, 500 58 9 , 500 What is the equilibrium price? $[ What is the equilibrium output for the industry? units M Grav Homework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 5 (2) Quantity (3) Profit (+) or (4) Quantity (1) Price Supplied, Single Firm Loss (-) Supplied, 1,500 Firms $23 1.53 28 points 33 39 44 48 eBook 58 Print References e. Now assume that there are 1,500 identical firms in this competitive industry. That is, there are 1,500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4 in the table above). f. Suppose the market demand data for the product are as follows: Total Quantity Price Demanded $ 23 19, 000 28 17, 000 33 15, 000 39 13, 500 44 12, 000 48 10, 500 58 9, 500 What is the equilibrium price? $ What is the equilibrium output for the industry? [ ]units For each firm? units Instructions: Enter your answers rounded to two decimal places. Enter positive values for profit or loss. What will profit or loss be per unit? ((Click to select) ) per unit = $ Per firm? $ Will this industry expand or contract in the long run? ((Click to select)]!) Mc Graw Homework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 6 The normal (accounting) profit in the economy is 7 percent. A firm in a purely competitive industry is earning $15 on every $150 invested by its founders. 1.53 Instructions: Enter your answers as a whole number. points a. What is its percentage rate of return? percent Book b. Is the firm earning an economic profit? Print (Click to select) If so, how large? References percent c. Will this industry see entry or exit? (Click to select) d. What will be the rate of return earned by firms in this industry once the industry reaches long- run equilibrium? percent Mc HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 7 A firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $350, and if it produced 700 units per day, its total cost would be $325. 1.53 points Instructions: Enter your answers rounded to two decimal places. a. What is the firm's ATC per unit at these three levels of production? eBook At 1,200 units per day, ATC = $ [ At 1,000 units per day, ATC = $ Print At 700 units per day, ATC = $ References b. If every firm in this industry has the same cost structure, is the industry in long-run competitive equilibrium? (Click to select) 4 c. From what you know about these firms' cost structures, what is the highest possible price per unit in long-run equilibrium? $ d. If that price ends up being the market price and if the normal rate of profit is 10 percent, then what will each firm's accounting profit per unit be? cents per unit Gra HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 8 There are 300 purely competitive farms in the local dairy market. Of the 300 dairy farms, 298 have a cost structure that generates profits of $15 for every $300 invested. 1.53 Instructions: Enter your answers as a whole number. points a. What is the percentage rate of return for these 298 dairies? percent eBook b. The other two dairies have a cost structure that generates profits of $28 for every $200 invested. What is their percentage rate of return? Print percent c. Assuming that the normal rate of profit in the economy is 9 percent, and that firms cannot References copy each other's technology, will there be entry or exit? (Click to select) Entry Exit in the number of firms affect the two that earn $28 for every $200 invested? Yes, because those two firms can claim a larger market share. No, because those two firms are too small. No, because the exiting firms didn't belong in the industry. Yes, because those exiting firms will spread their technology. e. What will be the rate of return earned by most firms in the industry in long-run equilibrium? percent f. If firms can copy each other's technology, what will be the rate of return eventually earned by all firms? percent Mc Graw HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 9 The table below shows the total cost (TC) and marginal cost (MC) for Choco Lovers, a purely competitive firm producing different quantities of chocolate gift boxes. The market price for a box of chocolates is $9 per box. 1.53 points Instructions: Enter your answers as a whole number. a. Fill in the marginal revenue (MR) and average revenue (AR) columns. ebook Choco Lovers Cost and Revenue Quantity of Gift Boxes TC ($) MC ($) . MR ($) AR ($) 25 Print 230 8 30 267 7.50 35 307 8 References 40 352 9 45 107 11 50 472 13 Instructions: For profit/loss, round your answers to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. A loss should be entered as a negative number. b. Given a price of $9 per gift box, how many boxes of chocolate should Choco Lovers produce? gift boxes What will the profit or loss be per gift box? $ per gift box c. Suppose that Choco Lovers raises the price to $11 per gift box. Now how many boxes should Choco Lovers produce? gift boxes What will the new profit or loss be per gift box? $ Mc Graw Hill Homework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 10 The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. 1.53 Buddies Production Costs points Quantity of Ear Buds MC ($) ATC ($) 5 9.00 10 2.00 5.50 eBook 15 2.44 4.48 20 3.56 4.25 25 4.50 4.30 Print 30 5.02 4.42 35 5.96 4.64 n 40 8.56 5.13 References Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? $1 c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? d. Now assume the market price is $5.50 per pair, and Buddies produces the profit- maximizing quantity of ear buds. What will Buddies profit or loss be per week? $ e. Buddies earns a normal profit when marginal cost equals marginal revenue at the minimum of marginal cost. Mc Graw HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 10 5 9.00 10 2.00 5.50 15 2.44 4.48 1.53 20 3.56 4.25 points 25 4.50 4.30 30 5.02 4.42 35 5.96 4.64 40 8.56 5.13 Book Print n Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round References your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds? c. If the market price for ear buds is $6 per pair, and Buddies produces the profit-maximizing quantity of ear buds, what will Buddies profit or loss be per week? $0 d. Now assume the market price is $5.50 per pair, and Buddies produces the profit- maximizing quantity of ear buds. What will Buddies profit or loss be per week? $ e. Buddies earns a normal profit when marginal cost equals marginal revenue at the minimum of marginal cost. marginal cost equals average cost at the minimum of average cost. average cost equals average revenue at the minimum of average cost. O marginal cost equals average cost. Mc Graw HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 11 The table below shows cost and revenue information for Choco Lovers, a purely competitive firm producing different quantities of chocolate gift boxes. Fill in the blanks in the table. 1.53 points Instructions: Enter your answers rounded to two decimal places. Choco Lovers Cost and Revenue Quantity of Gift Boxes eBook TC ($) ATC ($) MC ($) 15 170.00 11.33 10.00 20 217.50 0.88 Print 25 10.70 10.00 30 322.50 11.00 35 387.5 11.07 13.00 References 40 462.50 11.56 15.00 Assume the profit-maximizing price is $11 per gift box, and then answer the following questions: a. Profit-maximizing quantity = gift boxes b. Total revenue = $ c. Profit = $ [ d. Profit per unit = $ per gift box Gra HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 12 The table below shows the daily costs of Corny's Corn Cobs. Corny's sells corn by the dozen in a purely competitive market. The market price is $4.80 for a dozen ears of corn. Corny's Corn Cobs 1.53 Quantity (Dozens of Ears) AVC ($) ATC ($) MC ($) points 16 2.50 6.30 1.30 22 2.30 5.00 1.70 26 2.30 4.60 2.50 eBook 30 2.40 4 40 2.90 33 2.50 4.30 3.20 35 2.50 4.20 3.70 Print 38 2.60 4.20 4.00 40 2.80 4.30 4.80 References Instructions: In part a, enter your answer as a whole number. In part b, round your answer to 2 decimal places. Enter a loss as a negative (-) number. a. In the short run, if Corny's wants to maximize profits, how much corn should it produce? dozen ears of corn per day b. Assuming that Corny's produces in the short run, what will Corny's profit or loss be per day? $per day c. In the short run, assuming nothing else changes, Corny's should produce a lower quantity of corn per day. shut down, because the market price is above the AVC. produce a greater quantity of corn per day. produce the same quantity of corn per day. d. If the short-run price of corn falls to $2.10 per dozen, Corny's should produce a lower quantity of corn per day. shut down, because the market price is below the AVC. produce a greater quantity of corn per day. Mc Graw HillSmartbook Reading Assign Homework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 12 Corny's Corn Cobs Quantity (Dozens of Ears) AVC ($) ATC ($) MC ($) 16 2.50 6.30 1.30 22 2.30 5.00 1.70 1.53 points 26 2.30 4.60 2.50 30 2.40 1.40 2.90 33 2.50 4.30 3.20 35 2.50 4.20 3.70 eBook 38 2.60 4.20 4.00 40 2.80 4.30 4.80 Print References Instructions: In part a, enter your answer as a whole number. In part b, round your answer to 2 decimal places. Enter a loss as a negative (-) number. a. In the short run, if Corny's wants to maximize profits, how much corn should it produce? dozen ears of corn per day b. Assuming that Corny's produces in the short run, what will Corny's profit or loss be per day? per day c. In the short run, assuming nothing else changes, Corny's should produce a lower quantity of corn per day. shut down, because the market price is above the AVC. produce a greater quantity of corn per day. produce the same quantity of corn per day. d. If the short-run price of corn falls to $2.10 per dozen, Corny's should produce a lower quantity of corn per day. shut down, because the market price is below the AVC. produce a greater quantity of corn per day. produce the same quantity of corn per day. Mc Graw HillHomework Assignment 5 (Chapter... i Saved Help Save & Exit Submit Check my work 13 Farley's Frozen Yogurt is a purely competitive firm that sells frozen yogurt cakes. The market price is $8 per cake. Assume that AVC is $5 per cake, AFC is $2 per cake, and Farley's sells 150 frozen yogurt cakes. 1.64 points a. Farley's Frozen Yogurt Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the eBook option twice to empty the box. Print ? should shut down. ? should produce in the short run. References ? will have an economic profit. ? will have a short-run loss. 2 will have a normal profit. b. Suppose the marginal cost of a frozen yogurt cake is $10. Farley's Frozen Yogurt should produce less. produce more. not produce. produce the same quantity. Mc Graw