econ home work 5 - making a profit. 4. Shoe Store a. She...

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Abby Kelly Food and Recourse Economics Homework 5 1. Maximizing Profit a. 5 th output b. 6 th output 2. Profit maximizing a. I would advise the firm to increase the price of the product or decrease their average total cost. b. When finding out that there average variable cost where 3.50 I would advise the form to shut down 3. Since there is not a way to change the fixed cost, rental land at 4 dollars, and one cannot stop producing wheat, the only reasonable thing that one could advise is decrease the variable cost of labor. Right now the variable cost is running the farmer 4 dollars he needs to find a way to reduce that to at least break even so he is not losing money but ideally to one so he would be
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Unformatted text preview: making a profit. 4. Shoe Store a. She will sell 500 pairs of shoes b. Her total profit will be 35,000 dollars c. She should expect t more people to enter into the market since there is a profit to be made. d. The long run will be a perfectly elastic, and will be at 50 dollars. 5. The market equilibrium price is fourteen dollars. The equilibrium market quality is three units. Each firm should be making the same profit which is the market profit divided by the number of firms in the market. If it falls below three dollars then they need to get out of the market and find I new market to produce in....
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