The table below shows the daily costs of Corny's Corn Cobs. Corny's sells corn by the dozen in a purely competitive market. The market price is $7.40 for a dozen ears of corn. Corny's Corn Cobs Quantity AVC АТС MC (Dozens of Ears) ($) ($) ($) 5.00 12.50 2.50 11 4.50 10.00 3.30 13 4.60 9.20 5.00 15 4.70 8.80 5.70 16 4.90 8.60 6.50 18 5.10 8.50 7.40 19 5.30 8.50 8.00 20 5.50 8.50 9.50 Instructions: In part a, enter your answer as a whole number. In part b, round your answer to 2 decimal places. Enter a loss as a negative (-) number. a. In the short run, if Corny's wants to maximize profits, how much corn should it produce? dozen ears of corn per day b. Assuming that Corny's produces in the short run, what will Corny's profit or loss be per day? 2$ per day c. In the short run, assuming nothing else changes, Corny's should O produce a ower quantity of corn per day. shut down, because the market price is above the AVC. O produce the same quantity of corn per day. O produce a greater quantity of corn per day. d. If the short-run price of corn falls to $4.30 per dozen, Corny's should O produce the same quantity of corn per day. O produce a greater quantity of corn per day. produce a lower quantity of corn per day. O shut down, because the market price is below the AVC.

The table below shows the weekly marginal cost (MC) and average total cost (ATC) for Buddies, a purely competitive firm that produces novelty ear buds. Assume the market for novelty ear buds is a competitive market and that the price of ear buds is $6.00 per pair. Buddies Production Costs Quantity MC ATC of Ear Buds ($) ($) 25 2.20 30 2.02 2.17 35 2.45 2.21 40 3.57 2.38 45 4.00 2.56 50 5.46 2.85 55 5.93 3.13 60 8.53 3.58 Instructions: In part a, enter your answer as the closest given whole number. In parts b-d, round your answers to two decimal places. a. If Buddies wants to maximize profits, how many pairs of ear buds should it produce each week? pairs b. At the profit-maximizing quantity, what is the total cost of producing ear buds?

9. Problems and Applications Q9 The market for apple pies in the city of Ectenia is competitive and has the following demand schedule: Each producer in the market has a fixed cost of $6 and the following marginal cost: Quantity Marginal Cost (Dollars) 1 1 2 3 4 5 6 Complete the following table by computing the total cost and average total cost for each quantity produced. Quantity Total Cost Average Total Cost (Ples) (Dollars) (Dollars) 1 2 3 4 3 8 10 12 14 The price of a pie is now $11. At a price of $11, making a profit of O True O Fal pies are sold in the market. Each producer makes True or False: The market is in long-run equilibrium. Suppose that in the long run there is free entry and exit. In the long run, each producer earns a profit of each producer makes pies, so there are The market price is producers operating. pies, so there are At this price, producers in this market, each pies are sold in this market, and

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Austin is a dot-com entrepreneur who has established a Web site at which people can design and buy awatch. Austin pays $900 a month for a Web server and Internet connection. The watches that customers design are made to order by another firm, and Austin pays this firm $120 a watch. Austin has no other costs. The table shows the demand schedule for Austin's watches. Austin is making an economic profit. In the long run, the demand for Austin's watches OA. decreases; incurs an economic loss OB. increases; makes zero economic profit C. increases, increases his economic profit D. decreases; makes zero economic profit OE. decreases; shuts down and in long-run equilibrium, Austin MIER Price (dollars per watch) 200 160 120 80 40 0 Quantity (watches per month) 0 40 80 120 160 200

e. Please describe the effect on quantity and price when firms have an incentive to exit the market. (Hint: the number does not matter; just clarify how quantity and price change.) Price 12 10 8 6 4 2 ○ 20 20 40 60 MC ATC 80 AVC Demand curve 100 Quantity (beach balls per day)

Use the above figure. Total revenue at the profit-maximizing output is

Use the data from the following demand schedule to answer the questions that follow. Price (P) (Dollars) Quantity Demanded (Q) Total Revenue (TR) (Dollars) Marginal Revenue (MR) (Dollars) 24.00 0 0.00 21.60 21.60 1 21.60 16.80 19.20 2 38.40 12.00 16.80 3 50.40 7.20 14.40 4 57.60 2.40 12.00 5 60.00 -2.40 9.60 6 57.60 -7.20 7.20 7 50.40 -12.00 4.80 8 38.40 -16.80 2.40 9 21.60 -21.60 0.00 10 0.00 Make the unrealistic assumption that production is costless for the monopolist in this question. The monopolist will charge a price of $ for the monopolist. per unit and sell units. This will yield an economic profit of $ Now assume the marginal cost is above zero and is equal to the marginal revenue of the fourth unit. The monopolist will now charge monopolist will now earn price and produce when production was costless. In turn, the economic profit compared to when production was costless. Grade It Now Save & Continue

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In this video, Hamida may have made a mistake in identifying the profit/loss area. Identify whether or not she's made a mistake. If she hasn't, mark it as right. If she has, then identify the right profit/loss area. The graph is attached here again for your convenience Costs and revenue $ P2 P₁ Pol 0 W Qy MR MC ATC AVC Demand Quantity Hamida did not make a mistake. There is a loss of (P1-P2)Qy for this monopolistically competitive firm There is a positive profit of (P1-P2)Qy for this monopolistically competitive firm O There is a loss of (P2-PO)Qy for this monopolistically competitive firm