Consider the following hourly demand and cost schedule for a firm facing a fixed price. (T, is Total Profit).

Q P TRMRTCTVCMCATCAVCT

0$8.00$3.00

14

26

3 8

411

515

620

726

833

941

1050

1160

a.Complete the columns for ATC, AVC, and MC as well as those for (TC), TVC, & TFC.

b.Draw the curves for Demand, MR (Marginal Revenue), ATC, AVC, and MC, all in one diagram. Also draw the Total Revenue (TR), Total Cost (TC), TVC, and TFC in a second diagram right below the first one.

c.Determine, in order to maximize profit, how many units should this firm produce and why?

d.Calculate the total profit at the profit-maximizing level and demonstrate it graphically and geometrically in both diagrams.

2.Consider the following hourly Demand schedule and the Cost function for a Monopolisticfirm.

Q PTR MRTC TVCMCATCAVCT

0$19 $ 3

1 186

2177

3169

41512

51416

6 1321

71227

81134

91042

10951

11861

a.Draw the Demand, MR, ATC, AVC, and MC, all in one diagram.Also, draw the Total

Revenue (TR), Total Cost (TC), TVC, and TFC in another diagram right below the first

diagram.

b.Determine graphically and numerically that, in order to maximize profit (or minimize loss), howmany units should this firm produce and what price should it charge.What is the equilibrium price and output?Briefly explain.

c.At equilibrium, how much is the total revenue, total cost, and total profit.Demonstrate

numerically, graphically, and geometrically.Demonstrate TR, TC, TVC and Total Profit in both diagrams. Briefly explain.

d.At equilibrium (or at the optimal level), how much is the Consumer Surplus. Demonstrate.

e.Demonstrate the elastic and inelastic ranges of the demand curve and explain your

reasoning.To do this, you (preferably) should redraw the Demand and Marginal Revenueand Total Revenue curves.

How much is the deadweight loss due to monopoly, as compared with Pure Competition