8.* The profit of a firm depends on its use of a factor r and a parameter a according to f(x, a), increasing in a. The prices of the output and factor are p> 0 et uw > 0. Does the maximum profit of the firm increase or decrease if a increases? Why?
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- 10. Suppose a firm must pay an annual tax, which is a fixed sum, independent of whether itproduces any output.a. How does this tax affect the firm’s fixed, marginal, and average costs?b. Now suppose the firm is charged a tax that is proportional to the number of items itproduces. Again, how does this tax affect the firm’s fixed, marginal, and average costs?2. A firm has found from past experience that its profit in terms of number of unit X produces is given by –+ 729x + 2700 Find the value of x that maximizes the profit and the profit per unit of product, when this maximum level is achieved.100 90 80 70 60 ATC 50 40 30 20 AVC МС О 10 + 0 0 5 10 15 20 30 35 40 45 50 QUANTITY (Thousands of shirts) or each price in the following table, use the graph to determine the number of shirts this firm would produce in order to maximize its profit. Assume hat when the price is exactly equal to the average variable cost, the firm is indifferent between producing zero shirts and the profit-maximizing uantity. Also, indicate whether the firm will produce, shut down, or be indifferent between the two in the short run. Lastly, determine whether it will nake a profit, suffer a loss, or break even at each price. Price Quantity (Dollars per shirt) (Shirts) Profit or Loss? Produce or Shut Down? Shut down 10 20,000 Loss Shut down 20 10,000 Loss Shut down 32 5,000 Loss Either 0 or 37,500 Shut down 40 Loss 25 COSTS (Dollars)
- 4. Suppose that a firm's profit function is = 110q₁ - 3q7 - 2q1q2-2q2 + 140q2 and it must be that q1 = 2q2. Solve for q1, 92, 7. Solve for A. What is the interpretation of the constraint? 5. Suppose a firm's cost function is given as C = 6q+10q3-4192 +30 and it must be that 91 +92 = 34. What q₁ and q2 will minimize cost? = 6. Suppose U = X₁X2 and the budget constraint is given as 10x₁ + 2x₂ = and x₂, and A*. 120, solve for xEconomists assume that by pursuing a strategy of cost minimization of production, most firms try to achieve profit maximization. Can you discuss minimization of cost of production by pursuing a long-run expansion path strategy, instead of a short-run path strategy, ceteris parabus? If you can use a graph that would help me understand thank you56. Total profit from marginal profit. Hanna's Hat Com- pany's marginal profit, P, as a function of its total cost, C, is given by dP -200 dC (C + 3)3/2" a) Find the profit function, P(C), if P = $10 when C = $61. b) At what cost will the firm break even (P = 0)?
- 8. siuppose that the manager of a firm operating in a competitive market has estimated the firm's average variable cost function to be: AVC= 18-0.3Q Total fixed cost is $60 and the forecasted price of the firm's product is $12. 79 a. What is the corresponding marginal cost function? b. At what output is AVC at its minimum? C. How much outputs should the firm produce? d. How much profit or loss will the firm earn?,3. Suppose that a farm manager seeks to maximize its total profit function as given by the equation, profit=80x-2x^2-xy-3y^2+100y. let x-cabbages and y= onions. but the manager faces a constrain that the sum of the cabbages and onions must be equal to 12. a. Calculate the level of output at which the farm maximizes profit b. Calculate the farms profit. c. Comment on the farms performance.Suppose that a farm manager seeks to maximize its total profit function a s given by the equation, profit =80x-2x^2-xy-3y^2+100y. let x=cabbages and y= onions. but the manager faces a constrain that the sum of the cabbages and onions must be equal to 12.a. Calculate the level of output at which the farm maximizes profitb. Calculate the farms profit.
- Sketch a marginal cost curve for a firm that has constant marginal costs of production up to its capacity of 500 units but which cannot increase its output beyond that capacity PLEASEE SHOW THE CURVE32. What is the definite rule to maximize profit? Explain.3. Profit maximization using total cost and total revenue curves Suppose Bob runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Bob's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Bob produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 O ☐ ☐ 0 1 2 3 4 5 QUANTITY (Teddy bears) ☐ 6 Total Cost 7 8 O Total Revenue Profit ?