3. Below is information regarding Cory's Surfboard Inc. Complete the table and do the following (____/5):

a. On a large graph, plot the MC, AFC, AVC, and ATC curves from this data (____/5)b. EXPLAIN what would happen to each of Cory's per unit cost curves if the price of Styrofoamsurfboard blanks (a variable input) increases. How would the cost curves change if there was anincrease in his rent (a fixed input)? Explain why the results are different. (____/5)c. If the market for surfboards was perfectly competitive and the market price was $150, how many surfboards should Cory make and how much profit will he make for EACH surfboard? Draw theTotal Product 012345678Variable Costs (TVC) $06090130180250340490680Total Cost (TC) $100Average Fixed Cost (AFC)Average Variable Cost (AVC)Average Total Cost (ATC)Marginal Cost (MC)firm's demand on your graph in a. Explain how you got your answer. (____/5) *cannot edit picture ( it is just question 3, including chart a-c)

Unit III: Costs of Production and Perfect Competition Problem Set #3 1. Explain an example that demonstrates the "real world" application of each of the following. Define the terms in your own words and use examples that clearly demonstrate your understanding of each concept. a. Explicit and Implicit Costs ( /5) b. The Law of Diminishing Marginal Returns ( 15) c. Fixed Costs, Variable Costs, and Total Cost ( /5) d. Economies of Scale and Diseconomies of Scale ( 15) 2. Productivity and Costs a. Complete the attached worksheet "Production Function for Tony's Hat Store" ( 15) b. Complete the attached worksheet titled "Cost and Competitive Market Supply" ( /10) c. Explain the relationship between the marginal product curve and the marginal cost curve. In your response, explain why the marginal cost curve is "U" shaped using numerical examples. ( /5) 3. Below is information regarding Cory's Surfboard Inc. Complete the table and do the following ( 15): a. On a large graph, plot the MC, AFC, AVC, and ATC curves from this data ( /5) b. EXPLAIN what would happen to each of Cory's per unit cost curves if the price of Styrofoam surfboard blanks (a variable input) increases. How would the cost curves change if there was an increase in his rent (a fixed input)? Explain why the results are different. ( /5) C. If the market for surfboards was perfectly competitive and the market price was $150, how many surfboards should Cory make and how much profit will he make for EACH surfboard? Draw the firm's demand on your graph in a. Explain how you got your answer. ( /5) Total Variable Total Cost Average Fixed Average Variable Average Total Marginal Product Costs (TVC) (TC) Cost (AFC) Cost (AVC) Cost (ATC) Cost (MC 0 SO $100 60 2 90 3 130 180 5 250 340 490 680 4. Complete the attached practice FRQs (one or more will be done in class): a. No. 1 ( _/10) b. No. 2( /10) c. No. 3( /10) 5. Assume that apples are an inferior good. Draw a perfectly competitive market for apples and a firm selling apples in long-run equilibrium where price is $10 and the firm's equilibrium quantity is 50. Explain the following situations graphically and in words (Draw and label side-by-side graphs for each). a. EXPLAIN what happens in the short-run if incomes increase by 15%? (_ 15) b. EXPLAIN the process by which this market returns to long-run equilibrium ( 15)