Your SlideShare is downloading. ×
ECO 101 chap 9 problems
ECO 101 chap 9 problems
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

ECO 101 chap 9 problems

63

Published on

Introduction to Microeconomics assignment …

Introduction to Microeconomics assignment

For Mr. Haydory Akbar Ahmed's class

Published in: Education
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
63
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Chapter 9 Problem 3: Quantity 0 10 20 30 40 50 FC 100 100 100 100 100 100 VC 0 200 300 480 700 1000 TC 100 300 400 580 800 1100 ATC 30 20 19.33 20 22 AVC 20 15 16 17.5 20 MC 20 10 18 22 30 35 30 25 Price 20 ATC 15 AVC MC 10 5 0 0 10 20 30 40 50 60 Quantity b) The breakeven price is at the minimum point of ATC, which is 19.33. The shutdown price will be at the minimum point of AVC, which is 15. c) If Price (P) = 21, Kate makes a profit because we can see that P>ATC. She will continue producing. d) If price (P) = 17, Kate is suffering a loss. Because we can see from the table that price is less than minimum ATC. However, she will continue producing since P> min AVC (from the table). She can cover her variable cost of production. e) When P= 13 her TR= 13*16= 208 TC= 16*23= 368 VC= 16*16.5= 264 As we can see, her total revenue does not cover her total cost thus she runs at loss. Moreover it does not cover her total variable cost to enable her to keep running her business, so she must shut down.
  • 2. Problem 4 a. Quantity 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 FC 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 50000 VC 0 5000 8000 9000 14000 20000 33000 49000 72000 99000 150000 TC 50000 55000 58000 59000 64000 70000 83000 99000 122000 149000 200000 ATC AVC MC 55 29 19.67 16 14 13.83 14.14 15.25 16.56 20 5 4 3 3.5 4 5.5 7 9 11 15 5 3 1 5 6 13 16 23 27 51 60 50 Price 40 30 ATC AVC 20 MC 10 0 0 2000 4000 6000 8000 10000 12000 Quantity b) Market price (P) is 23. In a perfectly competitive market the profit maximizing output is chosen where MR=MC. So, Bob chooses to produce 8000 DVDs. So his profit is TR 184000 TC 122000 Profit 62000 This is not the long run equilibrium. In the long run, there will be zero economic profit in a perfectly competitive market. Hence, price should be equal to minimum ATC i.e. 13.33.

×