1. Your cousin Vinnie owns a painting company with fixed costs of $200 and the following schedule for variable costs:

Quantity of houses painted per month

1

2

3

4

5

6

7

Variable cost

10

20

40

80

160

320

640

Calculate average fixed cost, average variable cost, and average total cost for each quantity. What is the efficient scale of the painting company?

2. a) What is marginal product, and what does it mean if it is diminishing?

b) Define economies of scale and explain why they might arise. Define diseconomies of scale and explain why they might arise.

3.a. What are the properties of a perfectly competitive firm?

b. Why a perfectly competitive firm might earn super normal profit in the short run and normal profit in the long run? Explain with graph.

4. a. What is a deadweight loss? Explain how monopoly creates a deadweight loss.

b. Compare the performance and efficiency of single-price monopoly and competition