2. (3 pts.) The table below shows a perfectly competitive firm's cost structure, including 1. (4 pts.) Juan is a high school student who is working only four hours per week at a Total Cost (TC), Total Fixed Cost (TFC), Total Variable Cost (TVC), Average local retail establishment. Juan has $ 34 per week of disposal income. With his $ 34, Variable Cost (AVC), Average Total Cost (ATC), Average Fixed Cost (AFC), and Juan buys only three goods ( J, K, and L ). The price of good J is $ 1 per unit, the price Marginal Cost (MC). of good K is $ 3 per unit, and the price of good L is $ 2 per unit. The table below Quantity of presents Juan's utility function for the three goods. Total utility is in the columns Output labeled "TU." TFC TVC ATC AFC AVC MC Good J Good K Good L $50 Units MU MUX TU, MU, TUF MUK TU , MUL $90 Product N $120 m $160 in $210 $270 8 $340 105 $420 117 po co $510 126 132 $610 2 $720 a. In the above table, fill in the columns showing Marginal Utility (MU) and Marginal Utility per dollar ("bang per buck" ratios) for all three goods. a. Complete the table above by filling in all the blanks. b. As Juan consumes more and more units of a good, the marginal utility of each b. Is this a Short-Run or a Long-Run profit-maximization problem? additional unit (increases / decreases / remains unchanged ), and How do you know? this reflect the "law of c. Given $34 of disposable income, Juan will purchase units of good J. c. If the market price for this perfectly competitive firm's product is $ 50 per unit. units of good K, and units of good L in order to maximize his total utility. how many units of OUTPUT will this profit-maximizing firm produce in the d. At Juan's utility-maximizing choice from part c. above, his Total Utility from the short run? units. What PRICE will they charge? $ per unit. Total consumption of the three goods is PROFITS will equal $ utils. e. If Juan gets a raise and his disposable income increases to $46 per week, Juan's d. If, alternatively, the market price for this firm's product is $ 70 per unit, how many utility-maximizing combination will be units of good J, units of good units of OUTPUT will this firm produce in the short run? units. What K and units of good L. PRICE will they charge? $ per unit. Total PROFITS will equal $ (NEXT PAGE) e. Finally, suppose the market price for this firm's product is $ 30. How much will the firm produce in the short run? units. Total profits will equal $ (Hint: When profits are negative, you have to ask the 4th Question: Would the firm be better off producing where MR=MC or by Shutting Down and producing 0 units?) (NEXT PAGE)