1.

The Following table shows total cost (TC) of a kid selling lemonade, where the lemonade market is considered "Competitive" market. Answer all following questions:

Quantity of Output Total Cost $

0 5

1 8.5

2 15

3 22

4 30.5

5 45.5

a.What are the conditions of Perfect Competition?

b.What does "Price Taker" mean?

c.If the market price is $8.50, what is the profit-maximizing output? Explain.

d.If the market price is $8.50, calculate the economic profit (loss)?

2

The below graph shows a monopolist that faces a market demand according to his cost functions. Answer all following questions:

a.Define Monopoly and explain the barriers of entry to such market.

b.What is the production level that will maximize profit (or minimize loss) for the monopolist. Explain.

c.Calculate the monopolist's total revenue (TR) at the production level that will maximize profit (or minimize loss).

d.Calculate the monopolist's total cost (TC) at the production level that will maximize profit (or minimize loss).

3.

Examine the following information about XYZ Incorporated.

Number of Workers Output MP VC FC TC AVC AFC ATC MC

0 0 0 110

1 12 30

2 31 60

3 41 90

4 50 120

5 58 150

6 64 180

7 67 210

a.Fill out the columns of the Table.

b.The firm is operating in the short run. How can you tell?

c.What is happening to marginal product? Why? At which output level is marginal product greatest?

d.Compare the MP with the MC. What is your observation?

4

Use the following table for this question.

Number of Workers Marginal Product Total Product Average Product

1 12

2 16

3 14

4 13

5 10

a.Fill out the columns of the Table.

b.With which worker do diminishing returns occu

c.Graph the marginal and average product curves.