Question Details

[solution] »

A firm producing good Y recently increased monthly production from1,500 units to2,000 units. This


Description

Answer Download


The Question

A firm producing good Y recently increased monthly production from1,500 units to2,000 units. This had no impact on the market price of good Y. At the new production level of2,000 units, thefirm's average cost is$3.5 while its marginal cost of production is$4. The marginal revenue however is fixed at$5 for all levels of output. Jake Williamson is the operations head of the firm. Jake feelsthat, since the firm has thecapacity, it should have increased production further to2,500 units which would have maximized profits. On the otherhand, Mathew Hayden of the market research team anticipates an increase in price to$5.5 in the near future. He therefore claims that the firm may not be maximizing economic profit in the short run even at2,500 units.

Which of the following is most strongly implied by this information?

A.The demand curve currently faced by the firm is horizontal at $4.

B.At the current level of production, the firm is making a profit of $3,000.

C. Mathew feels that the demand curve faced by the firm will shift downward.

D. The current price of good Y is equal to $4.

Please explain too


 


Solution details

Solution #00070339

[solution] »

A firm producing good Y recently increased monthly production from1,500 units to2,000 units. This.zip

Uploaded by: Tutor

Answer rating:

This paper was answered on 21-Sep-2019

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Sep 21, 2019

EXPERT

Tutor

ANSWER RATING

BEST TUTORS

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

STUCK WITH YOUR PAPER?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.

Order Now