With the highly anticipated release of the latest Star Wars film, fans wish to r
ID: 1131978 • Letter: W
Question
With the highly anticipated release of the latest Star Wars film, fans wish to relive the glory of the previous movies. As a result, a perfectly competitive market for Star Wars DVD box sets has formed. George is a producer in this market, and has total fixed costs of $180. Other data relating to costs and output are shown in the table below QuantityAverage Total Cost box sets ATC ($/box set 23.5 10 20 30 40 50 10.40 10.50 10.70 Using this information, calculate what quantity George needs to produce so that his average variable cost is $7.10 per box set? Answer to the nearest whole number (with no decimal places) QUESTION 10 Every night, the Yatala Drive-In screens movies can be enjoyed by customers from the comfort of their cars. Assume the market for popcorn is perfectly competitive. Mindy is a producer who sells 35 popcorn buckets, which is her profit maximising output. At this profit-maximising output level, Mindy's average total cost is $3.40 per popcorn bucket. Her minimum average variable cost is $3.20 per popcorn bucket. The market price is $3.30 per popcorn bucket. Answer the following questions 1. Mindy's economic profit or loss is (use a negative value if a loss). Answer in dollars, rounded to two decimal places (ie: to the nearest cent) 2. State whether the following statement is true or false: "Mindy's marginal revenue is $3.30 per popcorn bucket." Type T for true, or F for false 3. At the current market price, should Mindy shut down? Type Y for Yes, or N for NoExplanation / Answer
Answer 9 : As Geogre need to calculate at how manyunits of quantity average total cost is exactly equal to average fixed cost as well as average variable cost.
ATC = AFC +AVC
The quantity that george produced 50 units of output where AVC =$7.10
Answer 10 : 1 : Mindy Economic profit = TR -(Explicit Cost + Implicit Cost)
Total Revenue = $3.30 * 35 units = $115.5
Explicit Cost = $3.40 * 35 units = $119
Implicit Cost = 0 ( Not given)
Economic profit = $115.5 - $119 = - $3.5= -350 cents
2 : The statement is T. As marginal revenue means the revenue generated from the selling an additional unit of output level. The output per bucket has been increased as marginal revenue remain same.
3 : The answer is N. Mindy should not shut down the production level because if they are new in a popcorn industry but generate maximum output level.At current price they are able to cover the average variable cost.
Quantity ATC TC = FC +VC TVC AVC 0 - - - - 10 23.5 235 55 5.5 20 14 280 100 5 30 10.40 312 132 4.4 40 10.50 420 240 6 50 10.70 535 355 7.10Related Questions
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