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What is the optimal output, price and profit of the firm

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Reference no: EM13123688

I. Perfect Competition








a. Fill in the table for the perfectly competitive firm. Explain how you arrived at each number

b. What is the optimal output, price and profit of the firm?





c. Is the firm in long or only short-run equilibrium? Explain.

















Perfectly Competitive Firm





Perfect Competition 
Market


total total







quantity marginal variable fixed total marginal total


Quantity Quantity
supplied cost cost cost cost revenue revenue profit
Price Demand Supplied
10 $5 $71





$5 16,000 10,000
11
$77





$6 15,000 11,000
12
$84





$7 14,000 12,000
13
$92





$8 13,000 13,000
14
$101





$9 12,000 14,000
15
$111 $12




$10 11,000 15,000
























II. Monopoly









a. Fill in the table for the monopoly firm. 
Explain how you arrived at each number



b. What is the optimal output, price and profit of the firm?





c. Compare and explain the monopoly differences 
in price, quantity and profit to the PC model in I above.












Monopoly Firm






Monopoly Market


total total







quantity marginal variable fixed total marginal total


Quantity
supplied cost cost cost cost revenue revenue profit
Price Demand
7,000 $5 $71,000

$8


$14 7,000
8,000
$77,000





$13 8,000
9,000
$84,000





$12 9,000
10,000
$92,000





$11 10,000
11,000
$101,000





$10 11,000
12,000
$111,000 $12,000




$9 12,000

III. Assume that the the market in the problems above is instead imperfectly competitive - let's say monopolistic competition. Please demonstrate your understanding of this market structure by listing an example price and quantity that a firm within the industry would set. Explain your answer. (Hint: Perfect competition and monopoly are boundaries for which imperfect competition exists between.)

Reference no: EM13123688

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