## Answered: - The cost of producing flat-screen TVs has fallen over the past

The cost of producing flat-screen TVs has fallen over the past decade. Let's consider some implications of this fact.?

A) Draw a supply and demand diagram to show the effect of falling production costs on the price and quantity of flat-screen TVs sold.

B) In your diagram, show what happens to consumer surplus and producer surplus.

C) Suppose the supply of flat-screen TVs is very elastic. Who benefits more from falling production cost- consumers or producers of these TVs

Homework # 3:

Tiga ping pong balls is a firm that operates in a competitive market. The ping pong balls sell for \$6

per package.

Output

(thousandp

ackages)

Price

(\$/package)

Total Revenue

(\$000)

Total Cost

(\$000)

0

6

3.0

1

6

4.0

2

6

4.8

3

6

6.5

4

6

9.3

5

6

14.5

6

6

20.5

7

6

27

8

6

34

9

6

41.7

10

6

Profit

(\$000)

Marginal

Revenue

Marginal

Cost

(\$/package)

(\$/package)

50.7

a. Fill in the blank. At what amount of output does the firm maximize its profit? How much is

the profit then?

b. Suppose the market price increases by \$1 (Pnew = \$7 per package), how do the above results

change?

Output

(thousandp

ackages)

Price

(\$/package)

Total Revenue

(\$000)

Total Cost

(\$000)

0

7

3.0

1

7

4.0

2

7

4.8

3

7

6.5

4

7

9.3

5

7

14.5

6

7

20.5

7

7

27

8

7

34

9

7

41.7

10

7

Profit

(\$000)

Marginal

Revenue

Marginal

Cost

(\$/package)

(\$/package)

50.7

c. Discuss how the producers? incentive to produce relates to the market price?

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Oct 07, 2020

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