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Hayden’s Hamster Store faces the costs listed in the followi…

Posted byAnonymous May 26, 2026

Questions

Hаyden’s Hаmster Stоre fаces the cоsts listed in the fоllowing table. Hayden sells her hamsters in a market with an upward sloping supply curve and downward sloping demand curve at a price of $80 per hamster. The total fixed cost is $300. Table: Hayden's Hamster Store Costs Quantity Total Variable Cost 1 $30 2 $70 3 $120 4 $180 5 $250 6 $340 7 $435 8 $535 9 $645 10 $760 Use the information in the table to answer questions a-h. Identify the profit maximizing quantity of hamsters. Explain your answer using marginal analysis. (3 points) Calculate the economic profit when producing the profit maximizing quantity you identified in part (a). Show your work. (3 points) Based on your answer in part (b), will the number of firms increase, decrease, or stay the same in the long run? Explain your answer. (2 points) Based on your answer in part (b), will the market price increase, decrease, or stay the same in the long run? Explain your answer. (2 points) Calculate the average fixed cost of producing 4 units. Show your work. (2 points) The income elasticity for hamsters is -1.5 and the cross price elasticity of demand for Good X with respect to hamsters is -0.5. Based on your answer to part (d) above, what will happen to the demand for Good X? Explain your answer. (3 points) Now suppose the government places a price floor on hamsters at a price of $70. Will deadweight loss in the market for hamsters increase, decrease, or stay the same in the short run as a result of the price floor? Explain. (3 points) Assume the government raises property taxes (a fixed cost) on Hayden’s Hamster Store. Will the profit maximizing quantity of hamsters increase, decrease, or stay the same in the short run? Explain. (2 points)

Tags: Accounting, Basic, qmb,

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