Chapter 12 Problem 4 Marginal Product Total Cost Average Total Cost Marginal Cost 200 20 300 15.00 5.00 30 400 8.00 3.33 40 500 5.56 2.50 30 600 5.00 3.33 20 700 5.00 5.00 10 800 5.33 10.00 5 900 5.81 20.00 A. Marginal product would rise, and then it would drop because of fading marginal returns. B. See above on the total cost column. C. Average total cost is U shaped at lower rates of output Average total cost decreases as output inflates;
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and economic profit is that in economic profit, profit or loss is calculated by subtracting opportunity cost of the inputs used from the revenue of sales. On the other hand, accounting or business profit is the difference between the total revenue and total costs incurred to earn that revenue. Now, in business accounting normal return is the minimum profit that is required to cover the costs of inputs and all of the expenses associated with it. It can be a profit just greater than the breakeven
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house the economy is the first issue that one would take in to consideration. Due to the fact that if the economy is bad then it may not be the best investment to take or if the economy is doing well it would be the best road to take. The marginal benefits and cost on the decision to purchase a home would have to consider the changes that might happen in one’s life style. The two elements will play a huge role in buying a new home one would still have to keep in mind the upkeep, insurance, interest
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at a very low price in the foreign market, wherein it feces perfectly elastic demand curve. The price in the foreign market may even be lower than the average cost of production. The firm then suffers losses here. However, the monopolist does not suffer an overall loss. By exploiting the home market, it can raise price above the average cost and earn monopoly profit, which might more than compensate for the foreign market losses. Fig. illustrates how the price discrimination is possible by the monopolist
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studied. Then, we will use this technique to calculate marginal cost, marginal revenue, and optimal output that will be produced by a competitive firm. . In Unit 2, The Analysis of Competitive Markets, we will study the welfare effects of a government policy by using consumer and producer surplus. Unit 1 Introduction In this Unit, we will learn a new mathematical technique. By using this technique, we calculate marginal cost, marginal revenue, and the optimal output the competitive firm
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= 60 - 25 P = $35 TR = Q X P TR = 5000 - 35 TR = $175,000 TC = 100 000 + (5 X 5000) + (0.0005 X 5000²) TC = $137,500 π = TR - TC = $175 000 - 137 500 = $37,500 The profit is maximized when Marginal Cost is the same as Marginal Revenue, and the Marginal Profit is equal to zero. The profit is at the maximum level of RM37,500. This can be reached when we produce 5,000 unit of items, at a selling price of $35. Question D: Comparison of Profit Maximization VS Revenue Maximising
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2015 SECTION A 1. Answer the following questions : 1×4 (i) Define marginal opportunity cost. (ii) Why is a production possibility curve concave ? (iii) State two characteristics of resources which give rise to an economic problem. (iv) Give two examples of microeconomic studies 2. Give meaning of (i) demand, (ii) normal good and (iii) inferior good. 3 3. Explain the effect of ‘input price changes’ on the
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you may use EXCEL, but if you do so, insert figures and tables from EXCEL onto this sheet. 1. Consider the total profit function ( = TR - TC = (22 –Q)Q – (10+2Q+Q2 ) a. Create a table that shows Total Revenue, Total Cost and Total Profit, (in your table, let quantity run from 0 to 13 in increments of 1.) Indicate in your table where both total profits and total revenues are maximized . Max total profits highlighted in yellow, max total revenues is in
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; noise, air or contamination. Due to the competitive markets it can become inefficient when the externalities occur, therefore government play’s a crucial role by making policies in an attempt to correct, the externalities. Externalities are a cost or the benefits arising from the economic transactions that can have an impact on the third party, and they aren’t taken into account by those whom undertake that particular transaction. In market economy externalities generally occurs where ever there
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; noise, air or contamination. Due to the competitive markets it can become inefficient when the externalities occur, therefore government play’s a crucial role by making policies in an attempt to correct, the externalities. Externalities are a cost or the benefits arising from the economic transactions that can have an impact on the third party, and they aren’t taken into account by those whom undertake that particular transaction. In market economy externalities generally occurs where ever there
Words: 1671 - Pages: 7
