El Iphone 7
Enviado por omarkzx • 12 de Agosto de 2014 • 588 Palabras (3 Páginas) • 195 Visitas
Perfect Competition Issues
2. Fast Copy is one of the many companies that are photocopied near a university. The figure shows the cost curves of the company. The market price of a copy is 10 cents.
calculate:
a. What is the marginal revenue of the company?
For a perfectly competitive firm price is always equal to the marginal revenue earned by the firm. Thus the marginal revenue of the firm is 10 cents.
b. What is the production company to maximize profits?
Company should produce at the level where marginal revenue is equal to marginal costs of the firm is equal to marginal revenue. Marginal revenue of the firm is 10 cents. Marginal cost of the firm is at 10 cents when the firm is producing 80units. Thus profit maximizing level of production is 80 units.
(Process: a company always tries to produce till a point where its marginal revenue is greater than or at maximum equal to its marginal cost. In the previous part we found out that marginal revenue is 10 cents. We locate the point on the graph where marginal cost is equal to marginal revenue. Quantity produced is the quantity corresponding to MR=MC=10 cents, as can be observed from the graph.)
c. What is the profit of the company at the optimal point of production?
Profit of the firm at the optimal level can be calculated by subtracting total cost from total revenue. Total revenue is the product of price charged by the firm with quantity sold, whereas total cost can be calculated by multiplying average total cost and quantity traded.
Total revenue =80*10=800
Total cost = average total cost* quantity = 7*80 = 560
Profit = total revenue-total cost =800-560=240
(Process: profit=total revenue –total cost
Total revenue=price*total quantity produced or sold
Total cost =average total cost*quantity sold or produced
From the previous part we know the amount being sold, then using the graph we can find the corresponding average total cost level is 7 cents)
4. The plan of the paper market demand is:
Price Quantity demanded
3.65 500
5.20 450
6.80 400
8.40 350
10.00 300
11.60 250
13.20 200
The
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