With the highly anticipated release of the latest Star Wars film, fans wish to r

Question

With the highly anticipated release of the latest Star Wars film, fans wish to relive the glory of the previous movies. As a result, a perfectly competitive market for Star Wars DVD box sets has formed. George is a producer in this market, and has total fixed costs of $180. Other data relating to costs and output are shown in the table below: QuantityAverage Total Cost box sets ATC ($/box set) 23.5 10 20 30 40 50 10.40 10.50 10.70 Using this information, calculate what quantity George needs to produce so that his average variable cost is $7.10 per box set? Answer to the nearest whole number (with no decimal places) 50 QUESTION 10 Every night, the Yatala Drive-In screens movies can be enjoyed by customers from the comfort of their cars. Assume the market for popcorn is perfectly competitive. Mindy is a producer who sells 35 popcorn buckets, which is her profit maximising output. At this profit-maximising output level, Mindy's average total cost is $3.40 per popcorn bucket. Her minimum average variable cost is $3.20 per popcorn bucket. The market price is $3.30 per popcorn bucket. Answer the following questions 1. Mindy's economic profit or loss is -3.5 (use a negative value if a loss). Answer in dollars, rounded to two decimal places (ie: to the nearest cent) 2. State whether the following statement is true or false: "Mindy's marginal revenue is $3.30 per popcorn bucket." Type T for true, or F for false T 3. At the current market price, should Mindy shut down? Type Y for Yes, or N for No N

Explanation / Answer

10) 1) mindy's economic profit or loss is

profit = TR -TC.

profit = 35*3.30 - 35 *3.40 = 115.5 - 119

profit = -3.5

2) TRUE,

Marginal revenue = TRn -TRn-1

marginal revenue = 115.5 -112.2 = 3.3

3) No .

because, Mindy profit is still cover it avergage variable cost. or market price is greater than average variable cost. therefore, at the current market price, Mindy should not shut down.

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