Refer to the following information about 3 hypothetical perfectly competitive firms' costs at their profit maximizing outputs. For each firm answer the listed questions. Firm 1 Firm 2 Firm 3 Price = Price $150 Price = $150 $150 ATC= $160 ATC = $160 ATC= $140 AVC = $130 AVC = $155 AVC = $130 1. Will each of these firms earn economic profit, break-even or incur losses? Explain why and show your work. 2. Calculate the per-unit profit or loss if there is any for each firm. Show all your work. 3. Will each of these firms make a decision to continue production at the current output or will make a decision to shut-down. Explain why. Paragraph v в I U 12pt v

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Consider a firm selling apples and the market for apples is perfectly competitive. The following table presents the costs of a firm. Use the given information to answer questions 35 - 42. Q AFC AVC ATC MC TC 1$300 $100 $400$100$400 2 150 75 225 50 3 100 70 170 60 4 75 72.5 147.5 80 5 60 80 140 11O| 6 50 90 140 140| Find the market price such that the firm's maximized profit = $0 Answer: The firm's maximized profit is $0 if the market price = $.

Question 5 Let's suppose that a perfectly competitive firm has the following revenue and cost data. How many products should the firm produce in order to maximize its profits? You can assume that the firm's price is greater than its average variable cost. Quantity Marginal Revenue Marginal Cost 40 $4 $7.70 41 $4 $5.10 42 $4 $3.30 43 $4 $2.10 44 $4 $2.50 45 $4 $3.70 46 $4 $4.10 47 $4 $5.20 48 $4 $10 Question 6 What is the profit maximizing (or loss minimizing) rule for a firm in perfect competition? Be sure to list all of the conditions.

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