Assume that the purely competitive firm operates as described below: Q TFC TVC TC AC MC TR MR Profit 3 Graph TR and TC for the firm 1 8. 4. 11 15 6. 21 7. 30 8. 42 6. 60 10 85 (a) Complete all the cost columns. (b) Assume price = $5. Complete the rest the table. (c) Graph TR and TC on the graph up and to the right. (d) For the market graph below on the right, label demand, supply and the prevailing market price. Label the equilibrium market quantity with q*. (e) For the firm graph below to the left, label the axis. PLOT USING THE DATA IN THE TABLE the demand curve the firm faces, the marginal revenue curve, the average cost curve, the marginal cost curve, and the equilibrium price, quantity. Show the profit. Do all the plots give you the same answer?

File 20 19 Home 23 24 25 Insert Calibri 26 X ✓ fx 27 28 29 Draw Page Layout く 11 A B C D G H Question 3: Profit Maximization for a Perfectly Competitive Firm (Parts a - g) E Answers: B TR =P*Q MR = change in TR/ change in Q MC = change in TC/ change in Q Profit= TR - TC Profit is max at Q, such that MR = MC. Parts (a) - (c): P Q Formulas F TR Data SV You will complete the rest of table as specified in the following parts of this assignment. b) Use Excel functions to calculate TC = 20 + 10*Q + 2*Q² and MC. Verify that MC = 10 + 4*Q. 1 c) Use Excel functions to calculate Profit = TR - TC. 2 d) Use the MAX function in Excel to find the highest profit this perfectly competitive firm can earn. 3 What is the profit-maximizing output? Verify that it satisfies the condition MR = MC. 4 5 6 MR Av... Review TC I e) Use the MIN function in Excel to find the break-even price of this company. f) Re-do the table you created in the previous parts if FC increases to $30. Compare the highest profit this…

1. Consider a firm with the following cost and inverse demand functions. Cost($) 20 3 Cost Function N 3 quantity Price($) 16 13 30 10 Inverse Demand quantity (a) What are the average costs of producing 1, 2, and 3 units for this firm? (b) What are the marginal costs of producing first, second, and third units for this firm? (c) Does this firm enjoy either economies or diseconomies of scale? (d) What are the profits of producing 1, 2, and 3 units for this firm? (e) When does the firm maximize its profit? Select from producing 1, 2, and 3 units.

Given your understanding of the various market structures, use the information contained in the diagram below to answer the following questions. Price and cost (dollars per unit) $750 600 475 460 450 400 a) $500, 600 The firm would maximize profit by charging b) $400, 675 Oc) $750: 500 500 d) $400, 500 MR 650 700 725 per unit and producing? ATC MC Quantity per year

11 Price and costs (dollars) (a) more; less; (b) less; more; (c) (d) less; less. 2 more; more; 0 MC ATC Q₁ Q2 Q3 FIGURE 4 Figure 4 describes a perfectly competitive firm which faces a price of P₁. Its marginal cost curve is given by MC and its average cost curve is ATC. If the perfectly competitive firm produced Q3, the firm's economic profit would be than if it produced Q₁ and than if it produced Q₂. Quantity (per day)

6. A firm manufactures and markets a product that sells for Birr 20 per unit. Fixed costs associated with activity total Birr 40,000 a month, while variable cost per unit is Birr 10. A maximum of 10,000 units can be produced and sold. Required: a) Drive the TR, TC and Total profit functions. b) Sketch the TR, TC and Total profit functions in the same coordinate system. c) What is the Break-even point (in terms of quantity and sales volume)? d) Drives the new TC, Total profit functions given that FC is increased by Birr 10,000 a month, and calculate the new break-even point. e) Drive the new TC and Total profit functions given that unit variable costs is decreased by 20% and calculate the new Break-even point. f) Drive the new TR and Total profits functions given that the unit selling price increases by 20% and calculate the new break-even point. g) What is the relationship that you may inter from BEP& FC, P& BEP and V& BEP? h) Assume selling prince increases by 10%…

Refer to the figure and table to answer three questions. Price or Cost (dollars per bushel) 18 16 14 Price Marginal revenue 12 10 8 23450 6 4 N 0 Number of Bushels per Day 0 1 1 2 Price $13 13 13 13 13 13 3 4 5 Quantity (bushels of fish per day) Total Revenue c. Total profit or loss. $ SO 13 26 39 52 65 bushel(s) b. Profit or loss per bushel. per bushel Marginal cost 6 $10 15 22 31 44 61 Total Total Cost Profit $-10 -2 4 7 8 8 4 o Marginal Marginal Revenue Cost $13 13 13 13 13 $5 7 9 13 17 If the price of catfish changed from $13 to $12 per bushel, determine the Instructions: In parts a and c. enter your responses as a whole number. In part b, round your response to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) In front of those numbers. a. Profit-maximizing output. O

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1. The following company is in a price taking situation. Price (=marginal revenue) on the market for its products is equal to $3 per unit. Fixed cost is $1000 Fill in the table for all the columns. ( ) At which point should the company stop producing? At this point what is the per unit profit (mark- up or margin) for the company? Qty 0 100 200 300 400 500 600 VC $100 $300 $500 $700 $800 $1200 FC TC AVC ATC MC per unit MR per unit

A company operates a summer camp. The cost data for a 12-week summer camp is as follows: Charge per camper $400/week. Variable cost per camper $220/week, Fixed costs $240,000 per summer season Capacity per week 200 camper. the additional profit that can be made if a discount of $100 per week is given for another 10 campers is? Select one: a. Non b. $25,200 O c. $188,000 O d. $9,600