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Quantity (units per year) Variable Cost 9,000 17,000 24,000 38,000 55,000 78,000 Market prices, years 1991-1995: Year Market price 1991 9,000 1992 16,000 6,000 4,000 20,000 1993 1994 1995 123 4 5.6

Quantity (units per year) Variable Cost 9,000 17,000 24,000 38,000 55,000 78,000 Market prices, years 1991-1995: Year Market price 1991 9,000 1992 16,000 6,000 4,000 20,000 1993 1994 1995 123 4 5.6

Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter5: Buying The Necessities
Section: Chapter Questions
Problem 20AA
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Craigsburg enterprises has a fixed cost of 10,000. It’s variable costs are shown in the table below. These costs remain unchanged as market prices change over the next few years:
Year Market price 1991 9,000 16,000 6,000 4,000 20,000 1992 1993 1994 1995 a. Find the profit-maximizing output of this firm and calculate its profit for the years 1993 and 1995. (hint: apply the process of profit maximization using the cost information given in the first table and the price information given in the second table). b. How would this firm's output decision found in 1993 and 1995 differ from your answers in (a) if fixed cost were $20,000 instead of $10,000? How do you know?
Transcribed Image Text:Year Market price 1991 9,000 16,000 6,000 4,000 20,000 1992 1993 1994 1995 a. Find the profit-maximizing output of this firm and calculate its profit for the years 1993 and 1995. (hint: apply the process of profit maximization using the cost information given in the first table and the price information given in the second table). b. How would this firm's output decision found in 1993 and 1995 differ from your answers in (a) if fixed cost were $20,000 instead of $10,000? How do you know?
Variable Quantity (units per year) Cost 1 9,000 17,000 3 24,000 38,000 4. 55,000 6. 78,000 Market prices, years 1991-1995: Year Market price 1991 9,000 16,000 6,000 1992 1993 1994 4,000 20,000 1995
Transcribed Image Text:Variable Quantity (units per year) Cost 1 9,000 17,000 3 24,000 38,000 4. 55,000 6. 78,000 Market prices, years 1991-1995: Year Market price 1991 9,000 16,000 6,000 1992 1993 1994 4,000 20,000 1995
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