PS5 - PROBLEM SET #5 1. Economics 2010 Spring 2008 Pat=s...

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PROBLEM SET #5 Economics 2010 Spring 2008 1. Pat = s Pizza Kitchen operates in a competitive market. It has the following hourly costs: Output (pizzas per hour) Total cost ($ per hour) 0 $ 7 1 18 2 27 3 38 4 51 5 66 Hint: In this problem, FC = $7, because total cost = $7 when output = 0. a. If a pizza sells for $14, what is Pat = s profit-maximizing output per hour? How much economic profit does Pat make? b. What is Pat = s shutdown point? c. Derive Pat = s supply curve. What range of prices will cause Pat to leave the pizza industry? What range of prices will cause other firms with costs identical to Pat = s to enter the industry? What is the long-run equilibrium price of a pizza? 2. The following table contains information about the revenues and costs for Barry’s Baseball Manufacturing. All data are per hour. (TR = total revenue; TC = total cost; MR = marginal revenue; MC = marginal cost.) Q TR (p = $3) TC Profit MR MC TR (p = $2) Profit MR 0 _____ $1 _____ _____ _____ _____ _____ _____ 1 _____ 2 _____ _____ _____ _____ _____ _____ 2 _____ 4 _____ _____ _____ _____ _____ _____
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This homework help was uploaded on 04/21/2008 for the course ECON 2010 taught by Professor Aljamal during the Spring '06 term at Western Michigan.

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PS5 - PROBLEM SET #5 1. Economics 2010 Spring 2008 Pat=s...

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