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Suppose, at a given point in time, Snappy Snack Shack operates in a
perfectly competitive market and is producing its profit-maximizing
level of output. Suppose further that at this level of production,
Snappy's average total cost of producing snacks is $1.70, average
variable cost is $1.25, and marginal cost is $1.60. What is:
At her current level of production, what is...
a) Snappy's average fixed cost of producing a snack?
b) Snappy's marginal revenue from selling a snack?
c) the price of a snack?
d) Snappy's profit from selling snacks?
will Snappy Snack Shack remain open or shut down (in the short
run)?
a) 0.45
b) 1.60
c) 1.60
d) negative
they'll stay open because AVC<P<ATC
,Suppose Michelle's Mitten Mill operates in a perfectly competitive
market and is producing its profit-maximizing level of output.
Suppose further that at this level of production its average variable
cost of producing mittens is $17, average total cost is $19, and
marginal revenue is $18. In the short run, Michelle should:
1. maintain her current level of production since she is earning a
positive economic profit.
2. maintain her current level of production since her economic profit
is zero.
3. maintain her current level of production since she is minimizing
her losses.
4. shut down immediately.
5. increase production since it will increase her economic profit.
6. decrease production since it will increase her economic profit.
3. maintain her current level of production since she is minimizing
her losses
Relationship between P, and ATC or AVC for open, closed, positive,
and negative?
1) open if P>= AVC
2) closed if P < AVC
3) pos profit if P > ATC
4) negative profit if P < ATC
,Suppose Mimi's Magic Marker Company operates in a perfectly
competitive market and is producing its profit-maximizing level of
output. Suppose further that at this level of production its average
total cost of producing magic markers is $0.20, average variable
cost is $0.15, and marginal cost is $0.25. What's..?
1) the MR of producing magic markers?
2) the price of a magic marker?
3) Mimi's profit from selling magic markers (+ or -)?
1) 0.25
2) 0.25
3) positive
Suppose Mimi's Magic Marker Company operates in a perfectly
competitive market and is producing its profit-maximizing level of
output. Suppose further that at this level of production its average
total cost of producing magic markers is $0.20, average variable
cost is $0.15, and marginal cost is $0.25.
Over time, what will happen to:
a) the number of firms selling magic markers?
b) the price of magic markers
c) the quantity of magic markers transacted in the market?
d) profits of firms operating in the magic marker market?
a) increase
b) decrease
c) increase
d) decrease to 0
, Suppose, at a given point in time, Stephanie's Soda Fountain sells ice
cream in a perfectly competitive market and is producing its profit-
maximizing level of output. Suppose further that at this level of
production its average variable cost of producing ice cream is
$2.50, average total cost is $3.30, and marginal revenue is $3.00.
What's..?
a) the marginal cost of producing ice cream?
b) the price of ice cream?
c) Stephanie's profit from selling ice cream?
a) 3.00
b) 3.00
c) negative
Suppose, at a given point in time, Stephanie's Soda Fountain sells ice
cream in a perfectly competitive market and is producing its profit-
maximizing level of output. Suppose further that at this level of
production its average variable cost of producing ice cream is
$2.50, average total cost is $3.30, and marginal revenue is $3.00.
Over time, what will happen to:
a) the number of firms selling ice cream?
b) the price of ice cream?
c) the quantity of ice cream transacted in the market?
d) profits of firms operating in the ice cream market?
a) decrease
b) increase
c) decrease
d) increase to 0