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##### Economics Chapter Problems

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Question;Chapter 22;Problems;1-5,11;1. Use the;following to calculate profit at each quantity of output.;(Total);Output (Q) Price (P) Total Revenue;(TR) Total Cost (TC);0 \$1,900 \$ 0 \$1,000;1 \$1,700 \$ 1,700 \$2,000;2 \$1,650 \$ 3,300 \$2,800;3 \$1,600 \$ 4,800 \$3,500;4 \$1,550 \$ 6,200 \$4,000;5 \$1,500 \$ 7,500 \$4,500;6 \$1,450 \$ 8,700 \$5,200;7 \$1,400 \$ 9,800 \$6,000;8 \$1,350 \$10,800 \$7,000;9 \$1,300 \$11,700 \$9,000;2. Use the table in exercise 1 to calculate;marginal revenue and marginal cost.;3. Use the;information in exercises 1 and 2 to graphically show maximum profit. Label the;profit maximizing quantity and price, total cost, total revenue, and profit.;4. Can;accounting profit be positive and economic profit negative? Can accounting;profit be negative and economic profit positive? Explain.;5. Use the;following information to calculate accounting profit and economic profit.;Sales \$100;Employee;expenses \$40;Inventory;expenses \$20;Value of;owner?s labor in any other enterprise \$40;General Barclays Bank Microsoft;Motors;Sales \$50,091 \$5,730 \$2,750;Wages and;salaries \$29,052 \$3,932 \$ 400;Cost of;capital \$12,100 \$ 750 \$;35;Interest on;debt \$ 7,585 \$ 275 \$ 5;Cost of;materials \$ 6,500 \$ 556 \$1,650;11. Use the;information in the table to calculate total revenue, marginal revenue, and;marginal cost.Indicate the;profit-maximizing level of output. If the price was \$3 and fixed costs were \$5;what would;variable;costs be? At what level of output would the firm produce?;Chapter 23.;Problems;1,14;1. Cost;figures for a hypothetical firm are given in the following table. Use them for;the exercises below. The firm is selling in a perfectly competitive market.;OutputFixed Cost;AFC Variable Cost AVC Total CostATC MC;1 \$50 \$ 30;2 \$50 \$ 50;3 \$50 \$ 80;4 \$50 \$120;5 \$50 \$170;a. Fill in the blank columns.;b. What is;the minimum price needed by the firm to break even?;c. What is;the shutdown price?;d. At a;price of \$40, what output level would the firm produce? What would its profits;be?;14. Use the;following data for the exercises below.;Quantity Quantity;Price Supplied Demanded;\$20 30 0;\$18 25 5;\$16 20 10;\$14 15 15;\$12 10 20;\$10 5;25;\$ 8 0 30;a. What is;the equilibrium price and quantity?;b. Draw the;demand and supply curves. If this represents perfect competition, are thecurves individual-firm or market curves? How;is the quantity supplied derived;c. Show the;consumer surplus. Show the producer surplus.;d. Suppose;that a price ceiling of \$12 was imposed. How would this change the consumer and;producer surplus? Suppose a price floor of \$16 was imposed. How would this;change the consumer and producer surplus?;Chapter 24.;6,8;6. In the;following figure, if the monopoly firm faces ATC1, which rectangle measures;total profit? If the monopoly firm faces ATC2, what is total profit? What;information would you need in order to know whether the monopoly firm will shut;down or continue;producing in;the short run? In the long run?;8. Consider;the following demand schedule. Does it apply to a perfectly competitive firm?;Compute marginal and average revenue.;Price Quantity Price;Quantity;\$95 2 \$55;5;\$88 3 \$40;6;\$80 4 \$22 7;Chapter 25;Problems;11,13;11. The;cement industry is an example of an undifferentiated oligopoly. The automobile;industry is a differentiated oligopoly. Which of these two is more likely to;advertise? Why?;13. Use the;payoff matrix below for the following exercises. The payoff matrix indicates;the profit outcome that corresponds to each firm?s pricing strategy.;Firm A?s Price;\$20 \$15;\$20 Firm A earns \$40 profit Firm A earns \$35;Firm B earns;\$37 profit profit;Firm;B earns \$39;\$15 Firm A earns \$49 profit profit;Firmt B earns \$30 profitFirm A earns \$38;profit;Firm;B earns \$35;profit;a. Firms A;and B are members of an oligopoly. Explain the interdependence that exists in;oligopolies using the payoff matrix facing the two firms.;b. Assuming;that the firms cooperate, what is the solution to the problem facing the firms?;c. Given;your answer to part (b), explain why cooperation would be mutually beneficial;and then explain why one of the firms might cheat.

Paper#57054 | Written in 18-Jul-2015

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