(30 POINTS) Bob’s costs of DVD production are shown in the table below. Assume t
ID: 1224131 • Letter: #
Question
(30 POINTS) Bob’s costs of DVD production are shown in the table below. Assume that DVD production is a perfectly competitive industry. There is free entry into the industry, and anyone who enters will face the same costs as Bob. Use the numbers in the table below to answer the following questions. NOTE: I am looking for numerical answers.
Quantity of DVDs (Q)
VC
($)
FC
($)
TC
($)
AVC
($)
ATC
($)
MC
($)
0
0
50,000
50,000
-
-
-
1,000
5,000
50,000
55,000
5.00
55.00
5.00
2,000
8,000
50,000
58,000
4.00
29.00
3.00
3,000
9,000
50,000
59,000
3.00
19.67
1.00
4,000
14,000
50,000
64,000
3.50
16.00
5.00
5,000
20,000
50,000
70,000
4.00
14.00
6.00
6,000
33,000
50,000
83,000
5.50
13.83
13.00
7,000
49,000
50,000
99,000
7.00
14.14
16.00
8,000
72,000
50,000
122,000
9.00
15.25
23.00
9,000
99,000
50,000
149,000
11.00
16.56
27.00
10,000
150,000
50,000
200,000
15.00
20.00
51.00
(3 POINTS) What is Bob’s shutdown price? Explain your answer.
(3 POINTS) What is Bob’s breakeven price? Explain your answer.
(6 POINTS) If the market price of a DVD is $1, how many DVDs will Bob produce? Explain your answer.
(10 POINTS) If the market price of a DVD is $6, how many DVDs will Bob produce? At this output level, what is his total revenue? Show your work. At this output level, Bob makes a loss. What is the amount of the loss? Show your work. Why does Bob produce in the short run despite making a loss? Explain your answer.
(8 POINTS) If the market price of a DVD is $16, how many DVDs will Bob produce? At this output level, what is his profit? Show your work for full credit..
Quantity of DVDs (Q)
VC
($)
FC
($)
TC
($)
AVC
($)
ATC
($)
MC
($)
0
0
50,000
50,000
-
-
-
1,000
5,000
50,000
55,000
5.00
55.00
5.00
2,000
8,000
50,000
58,000
4.00
29.00
3.00
3,000
9,000
50,000
59,000
3.00
19.67
1.00
4,000
14,000
50,000
64,000
3.50
16.00
5.00
5,000
20,000
50,000
70,000
4.00
14.00
6.00
6,000
33,000
50,000
83,000
5.50
13.83
13.00
7,000
49,000
50,000
99,000
7.00
14.14
16.00
8,000
72,000
50,000
122,000
9.00
15.25
23.00
9,000
99,000
50,000
149,000
11.00
16.56
27.00
10,000
150,000
50,000
200,000
15.00
20.00
51.00
Explanation / Answer
snut down price is $50,000
break-even level is= to answer the next questions i need to know the selling price
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