What is the problem with the MC calculations? It is the change in total cost/cha
ID: 1102312 • Letter: W
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What is the problem with the MC calculations? It is the change in total cost/change in quantity - that is what I did.
This is a table for a competitive market.
Fill in the tollowing table: Fixed Cost Variable Total Cost Marginal AVC ATC Quantity Produced 0 1,000 2,000 3,000 4,000 5,000 6,000 Cost 0 1,250 1,600 3,750 6,750 12,000 18,000 Cost 800 800 800 800 800 800 800 800 2,050 2,400 4,550 7,550 12,800 18,800 2.05 1.2 1.52 1.89 2.56 1.25 0.35 2.15 1.25 0.8 1.25 1.69 2.4 5.25 6 Answer these questions, providing an explanation for each answer: (1) Given that the price is $2 per yard, how much should they produce and sell (assuming they are restricted to the choices here)? (Justify this both with marginal cost and marginal revenue reasoning and a "brute force" profit calculation.) (2) At what price should Thinkamajig consider a temporary shut down? (3) At what price should Thinkamajig consider exiting the industry? (4) How much profit is Thinkamajig making if they follow your advice in (1)? (5) If Thinkamajig is a "typica" firm (that is, other firms have similar costs to Thinkamajig), where will prices end up in the long run? (6) Once prices stabilize, how much should Thinkamajig plan to produce? (7) If, at the stable price point, there is a demand for 10 million yards of twill fabric per day, how many firms will be operating?Explanation / Answer
Q FC VC TC MC AVC ATC 0 800 0 800 1000 800 1250 2050 1.25 1.25 2.05 2000 800 1600 2400 0.35 0.8 1.2 3000 800 3750 4550 2.15 1.25 1.516667 4000 800 6750 7550 3 1.6875 1.8875 5000 800 12000 12800 5.25 2.4 2.56 6000 800 18000 18800 6 3 3.133333 MC is the addiional cost of making one unit of output.Here the output I taken in the blocks of 1000. that’s why you need to divide the change in total cost by 1000. Use MC = (TC)q-TC(q-1)/1000 1) p = $2. In the competitive setup P>=MC . This is at Q=2,000. 2) Temporary shut down point at Q where P = Avc. This is at Q=4000 3) Exit when P>=Atc. This is at Q=4000 4) Profit from 1 = 2*2000-2400 = 4000-2400 = $1600
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