3) A perfectly competitive firm finds that the market price for its product is $20.00. It has a fixed cost of $100.00 and a variable cost of $17.50 per unit for the first 50 units and then $25.00 per unit for all successive units. Instructions: Round your answers to 2 decimal places. a. Does price equal orexceed average variable cost for the first 50 units? (select) No or Yes . What is the average variable cost for the first 50 units?$_____. b. Does price equal orexceed average variable cost for the first 100 units? (select) No or Yes . What is the average variable cost for the first 100 units?$_____. c. What is the marginal cost per unit for the first 50 units?$______ per unit. What is the marginal cost for units 51 and higher?$_____ per unit. d. For each of the first 50 units, does MR exceed MC? (select) No Yes . What about for units 51 and higher? (select) No Yes . e. What output level will yield the largest possible profit for this perfectly competitive firm? ______ units.

4) Suppose you have been tasked with regulating a single monopoly firm that sells 50-kilogram bags of concrete. The firm has fixed costs of $30 million per year and a variable cost of $3 per bag no matter how many bags are produced.

Instructions: Enter your answers as whole numbers. In part e, round your answer to 2 decimal places.

a. If this firm kept on increasing its output level, would ATC per bag ever increase? (select) Yes/ No .

Is this a decreasing-cost industry? (select) Yes /No .

b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? $ per bag.

At that price, what would be the size of the firm's profit or loss?

At that price, the firm's (select) (profit or loss) , equals $_______ million.

Would the firm want to exit the industry?(select) Yes or No .

c. You find out that if you set the price at $4 per bag, consumers will demand 30 million bags.

How big will the firm's profit or loss be at that price? $______.

d. If consumers instead demanded 40 million bags at a price of $4 per bag, how big would the firm's profit or loss be?

At that price, the firm's (select) (profit or loss) equals $_______ million.

e. Suppose that demand is perfectly inelastic at 40 million bags, so that consumers demand 40 million bags no matter what the price is.

What price should you charge if you want the firm to earn only a fair rate of return? Assume as always that TC includes a normal profit.

$_____ per bag.