Sunday

January 25, 2015

January 25, 2015

Posted by **Mariah** on Sunday, November 19, 2006 at 5:26pm.

Q = 199 & ATC = $199

Q = 200 & ATC = 200

Q = 201 & ATC = 201

If a new customer offers to pay your roommate $300 for one dose, should she make one more? Explain.

Would the answer be yes because to produce one more would cost $202 which is less than the $300 the customer is willing to pay.

3. You go out to the best restaurant in town and order a lobster, you realize that you are quite full. Your date wants you to finish your dinner because you can't take it home and because "you've already paid for it" What should you do?

Isn't because I am full that the remaining amount of lobster is a sunk cost. So it is best to let it go and not eat it.

10. An industry currently has 100 firms, all of which have fixed cost of $16 and average variable cost as follows:

Quantity / Average variable cost: (1/$1),(2,$2), (3,$3), (4,$4), (5,$5), and (6,$6)

As this market makes the transition to its long-run equilibrium, will the price rise or fall? Will the quantity demanded rise or fall? Will the quantity supplied by each firm rise or fall?

1) She should produce whenever Marginal Revenue > Marginal cost. MR=300. What is Marginal Cost?

if Q=199 and ATC=199 then Total Cost TC = 199*199=39601.

When Q=200,ATC=200 then TC = 40000, Thus MC=40000-39601 = 399.

When Q=201,ATC=201 then TC=40401. Thus MC=401.

Now, what do you think the roomate should do?

3) I agree with your answer.

10) Good problem. First construct a marginal cost curve for a firm. (Same procedure as in 1 above).

Next, determine the break-even point for your firm. That is, at what price will the firm have zero net profits.

By my calculations, firms break even at P=$8. At P=8, each of the firms will produce 4 units. So, total revenue = 4*8=32. AVC=4*4=16 and fixed costs=16.

Your question says nothing about the current (short-run) price. So, lets assume. If Price < $8, then firms will be in a loss situation. Some will drop out, shifting the supply curve inward. Quantity demanded will fall, price will rise (to $8).

If Price > $8 then firms will enjoy an economic profit. More firms will enter (assuming they have the same cost structures). Supply shifts out, Price goes down, quantity demanded goes up, each firm's output will either fall are stay the same.

- Economics -
**tianbai**, Tuesday, November 13, 2007 at 8:34am2. A company is considering building a bridge across a river. The bridge would cost $2 million to build and nothing to maintain. The following table shows the company¡¯s anticipated demand over the lifetime of the bridge:

Price per crossing ($) 8 7 6 5 4 3 2 1 0

Number of crossings (¡®000) 0 100 200 300 400 500 600 700 800

a. If the company were to build the bridge, what would be its profit-maximizing price? Would that be the efficient level of output? Why or why not?

b. If the company is interested in maximizing profit, should it build the bridge? What would be its profit or loss?

c. If the government were to build the bridge, what price should it charge?

d. Should the government build the bridge? Explain your answer.

- ytfk zxobayec -
**ytfk zxobayec**, Saturday, January 17, 2009 at 3:09amdfoeimzcs hqlt tosk ubfdhl xhdrwzue gxufwmd hfiub

- Economics -
**µÄ**, Saturday, May 15, 2010 at 7:42pmµØ·½

**Answer this Question**

**Related Questions**

Micoeconomics - Your roommate's long hours in the chem lab finally paid off- she...

medical Coding - Can someone tell me if I coded this right. This 23-year-old ...

math - Vanessa typically works 8 hours per day in a normal 5 day work week. Last...

math - use : .# x 6 = minutes I did try to do it but came up with numbers like 5...

math - 6. If each of eight biology classrooms is in use for 5 hours and 15 ...

S.A.T Math - I do not understand This: Employee x is paid $12.50 an hour for the...

algebra - Lets say we have a sample of 100 bacteria in a lab that doubles every ...

Math - Beth got a job painting dorm rooms at her college. At top speed, she ...

Math - 1. Mackenzie spent a lot of time on her project for Columbus Day. On ...

algebra - Joan is paid 11/2 hours for every hour she works on Saturday and 2 ...