Marginal revenue MR and marginal cost MC are the additional revenue and cost

(respectively) added when the amount produced increases by one. With that inmind, add and fill in MR and MC columns for the table that follows. (Assume that each unit 0—99 has the same MC, and so does each unit 100—199, and so on.)

B. In the market for potted plants, which is competitive, each firm has a marginal cost of MC = 4Q. There are 500 identical firms.

a. Calculate the market quantity supplied Q5 at P = 16, P = 20, and P = 24.

b. Write out the market supply curve for this market as an equation.
Consider the market for potted plants from Question B.

a. Calculate the long-run price.

b. If inverse demand is P = 162 — ZQD, calculate the number of firms that will be in the market in the long run.
C. Consider a firm with a constant marginal cost. For example, MC = 8. For afirm like this, we would get a total cost function that looks like TC = 36 + 8Q.
Thinking carefully about where these curves come from (they’ll look different than in the standard graphl), draw a graph of this firm’s costs, including MC, AC, AFC, and AVC.
D. For each of the following, determine whether the firm has increasing, constant, or decreasing returns to scale. (HINT: Look at the Glossary and Concepts section.)

a. Total costs went from $200 to $400 and quantity increased from 40 to 80.

b. Total costs went from $1000 to $1200 and quantity increased from 50 to 70.

c. Total costs went from $300 to $500 and quantity increased from 100 to 150.
We say that a firm will shut down in the long run if P < AC, but that the firmwill shut down immediately only if P < AVC. Explain why we use ACfor the long runshutdown decision, but AVC for the immediate shutdown decision.
We have two main ways of calculating profit: Profit = TR — TC and Profit = Q * (P — AC). Show mathematically that these will always give the sameanswer. [HINT2Start by thinking about how you can factor Q out of TR and TC.]

E. Diane runs a factory that makes coffee mugs. In the factory, she employs a lot of part-time workers she can hire or fire as she needs. She also has a bunchof huge mug-making machines that take a lot of time to install, and she hiressome highly-skilled workers who have special knowledge about how to run themachine. Last year she made 1 million mugs. But this year her designs unexpectedly got very popular and she will need to make 2 million mugs. Referring to“short run average cost” and “long run average cost,” describe the things she canchange now to increase production, and what things she can change in the longrun, as well as how the costs of production will change in the long run as a result.
F. Consider the competitive market for leather handbags. In the hope that peoplewill not treat the lives of leather cows lightly, the government has implementeda price floor on the bags. They cannot be sold for less than $200.
Price“
R\ /S D Qo QTJantity G. Given this market, draw to the right of this graph a graph of an individual handbag supplier. Draw it so the firm makes a profit.