Question Details
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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QUALITYApproved
DATE ANSWEREDOct 07, 2020
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