Econ 150- Application #6 Pure Competition - Anderson Name What was the total profit that you received as a result of our activity in class? + 2 = $ 3 Pull out your Martin Money log sheets and fill them out with today's date and Application #8 as well as your profits. A. Fill in the blanks in the following table based on the information provided. Output Total Price per Total Cost Total (Tons per Revenue Variable Marginal Average Average Variable Total Cost Profits Month) Ton (P) (TC) (TR) Cost (VC Cost (MC) Cost (AVC) (ATC) (Monthly) 0 $500 500 $1,000 1 500 00 0 1,200 200 200 2 500 300 1,350 3 50 50 3 500 2000 1,550 50 200 4 500 2500 1,900 380 500 3000 2,300 1,300 400 6 500 3500 2,760 1 760 7 500 4000 3,250 2, 250 490 8 500 4500 3,800 2, 800 550 9 500 4,400 50 00 3 , 400 600 5,150 10 500 41 150 750 i. What is the profit maximizing output at which Everett Strawberry Farms should produce? ii. At the profit maximizing quantity in A(i), what is their profit? What is their ATC? What is their AVC? iii. Should they keep operating or shut down in the short run? Explain.B. The marginal cost of producing strawberries increases by $100 a ton (so take the MC column from part A and add $100 to each number/row as you copy the column in this table. From the new MC table, you can find Total Cost and from that you can find Total Variable Cost, etc.). Prices stay the same. Fixed costs are the same as in Table 1. Please fill out the table correctly with the new information. Output Total Price per Total Average (Tons per Total Cost Variable Marginal Variable Average Profits Ton Revenue Cost Month) Cost Total Cost Cost (Monthly) O $500 500 10OC --- O 500 1, 300 300 300 500 150 0 1, 550 550 250 500 2000 11850 850 300 500 2500 21 300 1, 300 450 LO 500 30 00 500 3500 500 4000 500 4500 500 500 0 500 5800 i. Now what is the profit maximizing (or loss minimizing) output at which Everett Strawberry Farms should produce ? ii. At the profit maximizing quantity in B(i), what is their profit? What is their ATC? What is their AVC? iii. Should they keep operating or shut down in the short run? Explain. C. Draw the firm cost and demand curves and the market demand and supply curves (2 graphs - 1 for individual firm and 1 for market) for a representative strawberry farmer. When the market price is at $500 a ton, this firm is losing money but does not shut down. Show what happens in the market as other firms shut down and leave the market. The resulting price gives the representative strawberry farmer positive economic profit. Be sure to label the graph completely