Q1) Nancy sells beeswax into a perfectly competitive market for $50 per pound. H
ID: 1119907 • Letter: Q
Question
Q1) Nancy sells beeswax into a perfectly competitive market for $50 per pound. Her fixed costs are S15 and she can produce up to 6 pounds pecr year (a) Fill-in the table below using the information provide in the table as well as above QuantityFied bllProfit Marginal Marginal (Q) Revenue Cost CostCost (FC) Revenue Cost MR)(MC (TR) (VC) (TC) 35 42 50 60 72 (b) What Q maximizes total revenue? (c) What Q maximizes profi (d) At the profit maximizing Q, what are marginal revenue (MR) and marginal cost (MC)? (e) Suppose fixed costs just to $30 per year, does the profit maximizing quantity change? (0) Suppose marginal cost (MC) increases by $8 at every quantity level due to higher wage costs for employees. Does the profit maximizing Q change? If so, what new Q maximizes profit Q2) Suppose a strawberry jam production firm has a shoet-run total cost curve given by TC = Qs-120° + 1000 1000. (a) What is the firm's fixed costs? (b) What the firms average variable cost (AVC) curve in terms of quantity (c) If output can be sold for $60, how many units should the firm produce for sale? Q3) Marty sells capacitors in a perfectly competitive market. His marginal cost is given by the function MC-Q. such that the marginal cost of the first capacitor is SI, and then $2 for the second capacitor, and so on (o) Draw a dingram showing the marginern of un horizotal axis and cost [in S unit) on vertical axis)? (b) If capacitors sell for S2 per unit, what is the profit maximizing O for Marty to sell? (c) Repeat (b) for $3, S$4, and S5 (d) Draw Marty's supply curve for capacitors and compare this diagram with part (a)'s diagram.Explanation / Answer
1)a
b) TR is maximized at Q = 6
c) Profit is maximized at Q = 4
d) MR = MC = 50
e) No
Explanation:
Profit is maximized where MR = MC
f) Yes, profit maximizing quantity will change. The new profit maximizing quantity is 3. This is a loss minimizing quantity.
Explanation:
Q TR($) = P*Q FC($) VC($) TC($) = FC+VC PROFIT MR($) MC($) 0 0 15 0 15 -15 1 50 15 30 45 5 50 30 2 100 15 65 80 20 50 35 3 150 15 107 122 28 50 42 4 200 15 157 172 28 50 50 5 250 15 217 232 18 50 60 6 300 15 289 304 -4 50 72Related Questions
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