How much will the firm produce in the short run

Assignment Help Microeconomics

Reference no: EM13815338

1. A firm's cost curves are given by the following table:

Q	TC	TFC	TVC	AVC	ATC	MC
0	$100	$100	_______	_______	_______	_______
1	130	100	_______	_______	_______	_______
2	150	100	_______	_______	_______	_______
3	160	100	_______	_______	_______	_______
4	172	100	_______	_______	_______	_______
5	185	100	_______	_______	_______	_______
6	210	100	_______	_______	_______	_______
7	240	100	_______	_______	_______	_______
8	280	100	_______	_______	_______	_______
9	330	100	_______	_______	_______	_______
10	390	100	_______	_______	_______	_______

a. Complete the table.

b. Graph AVC, ATC, and MC on the same graph. What is the relationship between the MC curve and the ATC, and between MC and AVC?

c. Suppose that market price is $30. How much will the firm produce in the short run? How much are total profits?

d. Suppose that market price is $50. How much will the firm produce in the short run? What are total profits?

e. Suppose that market price is $10. How much would the firm produce in the short run? What are total profits?

2. The following problem traces the relationship between firm decisions, market supply, and market equilibrium in a perfectly competitive market.

a. Complete the following table for a single firm in the short run:

OUTPUT	TFC	TVC	TC	AVC	ATC	MC
0	$300	$0	_______	_______	_______	_______
1	_______	100	_______	_______	_______	_______
2	_______	150	_______	_______	_______	_______
3	_______	210	_______	_______	_______	_______
4	_______	290	_______	_______	_______	_______
5	_______	400	_______	_______	_______	_______
6	_______	540	_______	_______	_______	_______
7	_______	720	_______	_______	_______	_______
8	_______	950	_______	_______	_______	_______
9	_______	1,240	_______	_______	_______	_______
10	_______	1,600	_______	_______	_______	_______

b. Using the information in the table, fill in the following supply schedule for this individual firm under perfect competition, and indicate profit (positive or negative) at each output level. (Hint: At each hypothetical price, what is the MR of producing one more unit of output? Combine this with the MC of another unit to figure out the quantity supplied.)

PRICE	QUANTITY SUPPLIED	PROFIT
$50	_______	_______
70	_______	_______
100	_______	_______
130	_______	_______
170	_______	_______
220	_______	_______
280	_______	_______
350	_______	_______

Reference no: EM13815338

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