ECON 528 HOMEWORK 2

Quantity of La Fixed Cost Variable Cost Total Cost Average Total Cost Quantity of Lanterns Fixed Cost (dollars) Variable Cost (dollars) Total Cost (dollars) Average Total Cost (dollars) 75 200 170 370 4.93 80 200 230 430 5.36 90 200 7.67 100 200 810 115 200 11.8 117 200 1264 1464 12.5 120 200 1480 Quantity of La Fixed Cost Variable Cost Total Cost Average Total Cost Quantity of La Fixed Cost Variable Cost Total Cost Average Total Cost Refer to Figure 12-1. If the firm is producing 700 units Select one: a. it is making a profit. Question text Refer to Figure 12-1. If the firm is producing 700 units, what is the amount of its profit or loss? Select one: a. loss equivalent to the area A Question text Refer to Figure 12-1. If the firm is producing 200 units Select one: a. it breaks even. b. it should cut back its output to maximize profit. c. it is making a loss. Question text Refer to Figure 12-3. If the firm is producing 500 units Select one: a. it should increase its output to maximize profit. Question text Refer to Figure 12-3. If the firm is producing 500 units, what is the amount of its profit or loss? Select one: a. profit equivalent to the area A Question text Refer to Figure 12-3. If the firm is charging a price of $12 per unit Select one: a. it is making a profit. b. it breaks even. Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. Refer to Figure 12-4. If the market price is $30, should the firm represented in the diagram continue to stay in business? If the revenue of the firm is enough to cover variable costs, they can stay in operation as long as they expect revenue to go up or cost to go down in the future. Economic Costs = $50,000 + $10,000 + $4,000 = $64,000 in economic costs. Accounting Costs = $40,000 + $15,000 + $5,000 = $60,000 in accounting costs No, I believe that she should because it is an economic costs that all businesses incur. She could potentially have a higher revenue closer to town and rent out her currently owned building to help alleviate the costs of the new building. Question text Total Revenue Total Cost Marginal Marginal Cost Quantity (TR) (TC) Profit Revenue (MR) (MC) 0 3 1 5 2 6 3 9 4 14 5 20 6 28 7 40 Total Revenue Total Cost Marginal Marginal Cost Quantity (TR) (TC) Profit Revenue (MR) (MC) 0 0 3 -3 -- -- 1 4 5 -1 4 2 2 8 6 2 4 1 3 12 9 3 4 3 4 16 14 2 4 5 5 20 20 0 4 6 6 24 28 -4 4 8 7 28 40 -12 4 12