3 Consider total cost and total revenue given in the followingtable: Quantity 0 1 2 3 4 S 6 7 Total cost $8 9 10 1 1 13 19 27 37 Total reven ue $0 8 1 6 24 32 4O 48 56 3 Calculate prot for each quantity. How much should the firm produce to maximise prot? b Calculate marginal revenue and marginal cost for each quantity. Graph them. (Hint: Put the points between whole numbers. For example, the marginal cost between 2 and 3 should be graphed at 21/2.) At what quantity do these curves cross? How does this relate to your answer to part (a)? c Can you tell whether this firm is in a competitive industry? If so, can you tell whether the industry is in a longrun equilibrium? 9 The market for pies is competitive and has the following demand schedule: Price $1 2 3 4 5 6 7 8 9 10 11 12 13 Quantity 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 demanded pies Each producer in the market has xed costs of $9 and the following marginal cost: Quantity 1 pie 2 3 4 5 6 Marginal cost $2 4 6 8 10 12 a Compute each producer's total cost and average total cost for 1 to 6 pies. b The price of a pie is now $1 1. How many pies are sold? How many pies does each producer make? How many producers are there? How much prot does each producer earn? C Is the situation described in part (b) a longrun equilibrium? Why or why not? d Suppose that in the long run there is free entry and exit. How much profit does each producer earn in the long-run equilibrium? What is the market price? How many pies does each producer make? How many pies are sold in the market? How many pie producers are operating? 10 An industry currently has 100 firms, each of which has fixed cost of $16 and average variable cost as follows: Quantity 2 3 4 5 6 Average variable cost $1 2 3 4 5a Compute a firm's marginal cost and average total cost for each quantity from i to 6. b The equilibrium price is currently $10. How much does each firm produce? What is the total quantity supplied in the market? c In the long run, firms can enter and exit the market, and all entrants have the same costs as above. As this market makes the transition to its longerun equilibrium, will the price rise or fall? Will the quantity demanded rise or fall? Will the quantity supplied by each firm rise or fall? Explain your answers. d Graph the long-run supply curve for this market, with specic numbers on the axes as relevant