Output Total Cost 0 - 2 rn 24 33 41 48 54 61 69 5 6 5. Refer to the above data. The total variable cost of producing 5 units is A. $61 B. $48 C. $37. D. $24. 6. Refer to the above data. The average total cost of producing 3 units of output is A. $14 B. $12 C. $13.50 D. $16. 7. The MR=MC rule can be restated for a purely competitive seller as AP=MR=MC B. MR=MC but P is not equal to MC C. MR=MC but P is not equal to MR D. MR is not equal to MC but P=MR. 8. Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation A. should close down in the short run B. is realizing a loss of $60 C. is maximizing its profits. D. is realizing a profit of $40.
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Andrew D.
Assume the following cost data are for a purely competitive producer: $$\begin{array}{ccccc} \hline \begin{array}{c} \text { Total } \\ \text { Product } \end{array} & \begin{array}{c} \text { Average } \\ \text { Fixed cost } \end{array} & \begin{array}{c} \text { Average } \\ \text { Variable cost } \end{array} & \begin{array}{c} \text { Average } \\ \text { Total cost } \end{array} & \begin{array}{c} \text { Marginal } \\ \text { cost } \end{array} \\ \hline 0 \\ 1 & \$ 60.00 & \$ 45.00 & \$ 105.00 & \$ 45 \\ 2 & 30.00 & 42.50 & 72.50 & 40 \\ 3 & 20.00 & 40.00 & 60.00 & 35 \\ 4 & 15.00 & 37.50 & 52.50 & 30 \\ 5 & 12.00 & 37.00 & 49.00 & 35 \\ 6 & 10.00 & 37.50 & 47.50 & 40 \\ 7 & 8.57 & 38.57 & 47.14 & 45 \\ 8 & 7.50 & 40.63 & 48.13 & 55 \\ 9 & 6.67 & 43.33 & 50.00 & 65 \\ 10 & 6.00 & 46.50 & 52.50 & 75 \\ \hline \end{array}$$ a. At a product price of $\$ 56,$ will this firm produce in the short run? Why or why not? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? Explain. What economic profit or loss will the firm realize per unit of output? b. Answer the relevant questions of 4 a assuming product price is $\$ 41$ c. Answer the relevant questions of 4 a assuming product price is $\$ 32$ d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2 ) and indicate the profit or loss incurred at each output (column 3). $$\begin{array}{cccc} \hline \begin{array}{c} \text { (1) } \\ \text { Price } \end{array} & \begin{array}{c} \text { (2) } \\ \text { Quantity } \\ \text { Supplied, } \\ \text { Single Firm } \end{array} & \begin{array}{c} \text { (3) } \\ \text { Profit }(+) \\ \text { or Loss }(-) \end{array} & \begin{array}{c} \text { (4) } \\ \text { Quantity } \\ \text { Supplied } \\ 1500 \text { Firms } \end{array} \\ \hline \$ 26 & \text {_____} & \$ \text {_____} & \text {_____} \\ 32 & \text {_____} & \text {_____} & \text {_____} \\ 38 & \text {_____} & \text {_____} & \text {_____} \\ 41 & \text {_____} & \text {_____} & \text {_____}\\ 46 & \text {_____} & \text {_____} & \text {_____} \\ 56 & \text {_____} & \text {_____} & \text {_____} \\ 66 & \text {_____} & \text {_____} & \text {_____} \\ \hline \end{array}$$ e. Explain: "That segment of a competitive firm's marginalcost curve that lies above its average-variable-cost curve constitutes the short-run supply curve for the firm." Illustrate graphically. f. Now assume that there are 1500 identical firms in this competitive industry; that is, there are 1500 firms, each of which has the cost data shown in the table. Complete the industry supply schedule (column 4). g. Suppose the market demand data for the product are as follows: $$\begin{array}{|cc|} \hline \text { Price } & \begin{array}{c} \text { Total Quantity } \\ \text { Demanded } \end{array} \\ \hline \$ 26 & 17,000 \\ 32 & 15,000 \\ 38 & 13,500 \\ 41 & 12,000 \\ 46 & 10,500 \\ 56 & 9500 \\ 66 & 8000 \\ \hline \end{array}$$ What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?
The average cost of producing a product is RM45 and the profit function is P(x) = x - 0.5x^2 where x is the level of output. Find the level of output when revenue is maximized. A. 45 B. 56 C. 52 D. 46 Question: The revenue and cost functions of a firm in ringgit are as follows. R(x) = 50x - 0.1x^2 C(x) = 10x + 1000 Find the break-even level of production. A. 40 OR 999.9 units B. 26.8 OR 373.2 units C. 49.9 OR 100 units D. 49.99 OR 1010 units Question: Given demand function is p + 3x = 600 [In ringgit per unit] where p is price per unit and x is quantity demanded and the profit function is P(x) = 450x - 3.5x^2 - 5,000 [In ringgit]. Find the value of x that will make the average cost minimum. A. 90 B. 100 C. 89.35 D. 95 Question: A firm produces x units of a product per month and the total cost per month in ringgit is given by C(x) = 180 + 0.04x^2. Find the average cost when 25 units are produced. A. RM8.50 B. RM8.20 C. RM7.80 D. RM9.20 Question: A product is sold at RM10 a unit. The total cost function, C(x) in ringgit for the product when x units are produced and sold is given as C(x) = 40 + 2x + 0.001x^2 where x is the level of output. Find the level of output which will maximize profit. What is the value of maximized profit? A. RM22,340 B. RM11,960 C. RM22,960 D. RM15,960
Carson M.
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