Intro Inclass/HW Set: Perfect Competition F22
Q1: Fill in the Blanks. Assume the fixed cost is $200. Product price is $130.
Output Variable
Cost
Total
Cost
AFC AVC ATC Marginal
Cost
Total
Revenue
MR Profit
1 $100 300 200 130
2 $150 350 100 260
3 $210 410 200 390
4 $300 500 200 520
5 $430 630 200 650
6 $600 800 200 780
7 $819 1019 200 910
Q2: Fill in the Blanks. Assume the fixed cost is $500. Product Price is $300
Output Variable
Cost
Total
Cost
AFC AVC ATC Marginal
Cost
Total
Revenue
MR Profit
1 200
2 300
3 450
4 650
5 900
6 1200
7 1550
Q3: When Marginal Revenue is greater than Marginal Cost you should produce
output to maximize profit. When Marginal Revenue is less than Marginal Cost you should produce output to maximize profit.
Q4: At a quantity of 265 units marginal revenue equals marginal cost. Fixed cost
is $2,500, the Total Variable cost is $9,500, and the total revenue is $11,000.
Calculate the average fixed cost, average variable cost, average total cost and marginal revenue. Should the company shut down or stay in business in the short run? In the long run?
Q5: When the Price is greater than Average Total Cost the firm is making? When the price is less than Average Total Cost the firm is making?
Q6: Using the graph below, determine the quantity of output to produce to maximize profit. Additionally, calculate total revenue, total cost, and total profit at the determined output quantity.
MC
ATC
P=MR
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22