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Economics Chapter Problems




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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