Describe a firms fixed costs of production

Reference no: EM131043266

Instructions: Answer all of the questions below. You may have a writing utensil(s) and a calculator, but all other items should be stored away and off of your table. If you have a question, raise your hand or come to the front. Once the exam has begun there are no bathroom breaks.

1. a. Draw a graph for the competitive market (Pe, MR, MC, ATC) that is earning a negative economic profit. Mark the profit-maximizing output Q*.

b. Explain how the market should adjust in the long run. Use a market supply and demand graph in your explanation.

c. If the equilibrium price = $50, ATC = $65 and AVC = $40, will the perfectly competitive firm shutdown in the short run? Explain why or why not.

d. Explain why profits are maximized at Q*. Use a graph with MR and MC as part of your answer.

2. a. Draw a graph of a monopoly (demand, MR, MC, ATC). Mark the profit-maximizing output Qm and the profit-maximizing price Pm. Shade the area representing profit.

b. Explain thoroughly why the monopoly output and price is inefficient.

c. Give an example of a barrier to entry that allows a monopoly to exist. Explain how this barrier limits competition.

d. Given the following demand information, calculate marginal revenue for each change in output (show your work):

Quantity Price

100 $30

150 $25

200 $19

250 $11

e. Explain the difference between the perfectly competitive firm's MR and the monopolist's MR. What explains why they are different?

3. a Define utility and marginal utility.

b. Explain the concept of diminishing marginal utility.

4. a. Describe a firm's variable costs of production. What kinds of costs would be included in variable costs?

b. Describe a firm's fixed costs of production. What kinds of costs would be included in fixed costs?

c. Define marginal cost of production. Using the following data, calculate the marginal cost for each change in output (show your work):

Output Total Cost

1000 $2,500

2000 $5,000

3000 $7,000

4000 $10,000

5. This is a free response question. It is your opportunity to talk about any topic or concept covered in the class. Your goal is to show that you actively engaged in some aspect of the course material. You may have thought particular assumptions regarding a model were farfetched. Discuss your thoughts. You may have been particularly interested in learning about how to maximize profits because you have an interest in owning your own business. You may discuss any topic from the entire semester. Your grade will be solely based on the degree to which you thought critically about the topic.

Reference no: EM131043266

Questions Cloud

What shape is the vietnam veterans memorial : True or false: Constructed sculpture consists of forms that may be built from materials such as wood, paper, string, sheet metal, and wire.

Human welfare is the subject of economics : "Human Welfare is the subject of Economics." This statement is said to be associated with the name of which of the economists?

Briefly describe each crime : Explain for each whether you think the type of crime is better explained by the social problems or social responsibility perspective and justify your response. Be specific and use examples to illustrate your points.

Calculate the money multiplier : If the Federal Reserve sets a 15% required reserve ratio and the total demand deposits of member banks are $220 billion, a) How much must the banks hold as required reserves? b) Calculate the money multiplier. If banks presently hold $55 billion in r..

Describe a firms fixed costs of production : Describe a firm's variable costs of production. What kinds of costs would be included in variable costs? Describe a firm's fixed costs of production. What kinds of costs would be included in fixed costs?

Government pay for the new spending : Suppose MPC=0.75 and the government pay for the new spending of 100,000 by increasing taxes by 100,000. Calculate the new Y. Could you provide the answer with specific formulas if possible?

Choose a level of significance for any hypothesis test : MAT10251 STATISTICAL ANALYSIS PROJECT - Choose a level of significance for any hypothesis test and a level of confidence for any confidence interval. Enter these values on page 2 of the Part C cover sheets along with the sample number from Part A.

Question regarding the firm cost curves : Sometimes we use math to determine precise cost curves . Other times, we must rely on our economic intuition to determine how various situations will impact our firm's cost curves. For each of the four scenarios below, determine how each event wou..

Understanding of american slavery expand : 1.) What did you learn about slavery that you did not know prior to reading this slave narrative? In other words, how did your understanding of American slavery expand?

User Account

All Pages