Take Test: Week 1-2 In-class Exercises Force Moving to another question will sav

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Take Test: Week 1-2 In-class Exercises Force Moving to another question will save this response. anton 14 of 27 Question 14 0 points Sav Assume that a firm can produce product A, product B or of this problem, that the firm's costs cannot be changed. The market prices and the quantities of A, B, and C these resources can produce are given as follows. Product Profit $14.00 9.00 .50 300 (a) Compute the firm's profit when it produces A, B, or C and enter these diata in the table (c) If the price of A rose to $16, which product will the firm produce? MacBook Air

Explanation / Answer

Costs=$100

Revenue=Mrket price*output

Profit=Revenue-costs

a) Profit from product A=14*10-100=$40

Profit from product B=9*11-100=$-1

Profit from product C=0.5*300-100=$50

b) Since the profit from product C is maximum compared to other two products, so the company will produce product C.

C) New price of product A is $16

New Profit from product A= 16*10-100=$60

Now since the profit from product A is higher than that of product C and B, So now the company will produce product A.

d) Since at $16 firm is experiencing profits and these profits will attract new firms in the market in search of these profits and so the number of producing product A will go up.

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