ECO108 HW7

# ECO108 HW7 - a Write down this Price-Taken firm’s total...

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ECO 108 Fall 2010 Bo He Name: __________________________ ID: __________________ Homework 7 Due Monday Nov 1st, at the beginning of LECTURE 1. The following table lists the total cost of production for the Acme Jacket Company. Jackets Per Day Total Cost Marginal Cost Average Cost 1 20 - 2 30 3 36 4 40 5 45 6 52 7 62 8 75 (a) Fill in the values for marginal cost and average cost (b) Plot the marginal cost curve with quantity of jackets on the x axis and cost on the y axis. (c) Suppose the market price for jackets is \$7. How many jackets will be produced? 2. A Price-Taken firm has its total cost curve (TC) like the one in the following graph. (It means the firm is in a perfectly competitive market.) Part I: Suppose the firm’s TR is as the one in the above, answer the following questions

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Unformatted text preview: a. Write down this Price-Taken firm’s total revenue function. b. What would be the market price this Price-Taken firm is facing? (Hint: MR = P, MR is the slop of TR) c. If the firms operates at X=200, estimate its total variable cost? (TC=FC+TVC) d. If the firm shuts down, how much is its loss? e. Estimate the range of output where the firm’s profit is negative. f. Estimate the range of output where the firm’s profit is positive and increasing as its output increase . g. Estimate the range of output where the firm’s TR is greater than its TC and meanwhile, the increasing in its TR is slower than the increasing in its TC as its output increase. h. Estimate the firm’s optimal level of output. i. Estimate the firm’s maximum profit under the current market price....
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## This note was uploaded on 10/20/2011 for the course ECO 108 taught by Professor Wolman during the Spring '08 term at SUNY Stony Brook.

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ECO108 HW7 - a Write down this Price-Taken firm’s total...

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