MC and MR Table 2.1: information Quantity MR MC 1 $8.00 $6.00 $8.00 $7.00 3 $8.00 $8.00 4 $8.00 $9.00 5 $8.00 $10.00 Refer to Table 2.1. At an output level of 3 units, this competitive firm should production -in order to maximize profits. O No answer text provided. change ONo answer text provided. O not change

Refer to Figure 8.1. The firm earns zero profit at what output? Consider the following diagram where a perfectly competitive firm faces a price of $40. O A. O. B. 34 and 79. OC. 54, O D. 67. E. 60. 44 40 31 30 20 10 4 10 20 30 40 50 34 Figure 8.1 60 70 67 79 MC AC AVC D 80 1 OUTPUT

Do all part to both question 1 and question 2 Question 1 (Q is quantity of production) Q TFC TVC TC AFC AVC ATC MC 1 60 15 3 4 50 8 22 140 7 20 8 60 9. 300 10 50 a. Fill out the table. b. Assume the cost table is of the purely (perfectly) competitive firm. Price = $40. What is the equilibrium quantity at that price. c. How much is the Profit/or Loss/or breakeven point d. What is the Marginal Revenue for this question e. Draw the necessary graphs as shown in class. Identify Q, P at equilibrium, and identify the total revenue and total cost areas, and the Profit, or loss or breakeven area which is applicable to this question.

The following five individuals have different utility functions over food (good x) and clothing (good y): 1) u₁(x, y) = 3x²y 2) u₂(x, y) = 2√x + y 3) Uz(x, y) = x0.6y0.4 4) u₁(x, y) = x² + y² 1 5) us(x, y) = x + 3y For each of these people: a) Compute their marginal utilities of good x, MUx = Ju(x,y) MU, = ду du(x,y) ax b) Check whether the property of "more is better" is satisfied for both goods? Explain. [Hint: Check whether marginal utilities are positive assuming positive amounts of good x and good y] ƏMUX əx and marginal utility of good y, c) Does the marginal utility of good x diminish, remain constant, or increase as each of the individuals buys more x? Explain. [Hint: There are 2 ways to do it: 1) visually check what happens to the expression of MUx when x increases (does it decrease, keep constant or decrease?); or 2) take the partial derivative of this marginal utility with respect to x, that is ƏMUx .aMUX ƏMUX If 0, the marginal utility of x is increasing in x] d) Does the…