ECON 2302 - PRINCIPLES OF MICROECONOMICS - FALL 2021

ASSIGNMENT INFORMATION:

Assume that EasyComp, a computer company operating in a perfectly competitive market structure, produces affordable, easy-to-use home computer systems. EasyComp has fixed costs of $250. EasyComp's marginal cost of producing computers is $700 for the first computer,

$250 for the second, $300 for the third, $350 for the fourth, $400 for the fifth, $450 for the

sixth, and $500 for the seventh. Please respond to the following questions below by drawing on the three criteria of the empirical and quantitative skills core objective.

a. Please fill in the missing cost values in the table below by drawing on the above given information and by rounding your calculations to the nearest whole number where you round numbers of 0.5 and above up and numbers of 0.49 and below down. (criteria: manipulation of numerical data or observable facts)

Q	TC	ATC	TVC	AVC	MC
	(Total Cost)	(Average total cost)	(Total variable cost)	(Average variable cost)	(Marginal cost)
0
1
2
3
4
5
6
7

b. Please state first at what price the break-even point would be and then briefly describe how you found the break-even point based on values above. (criteria: analysis of numerical data or observable facts)

c. Please state first at what price the shutdown point would be and then briefly describe how you found the shutdown point based on the values above. (criteria: analysis of numerical data or observable facts)

d. If EasyComp sells the computers for $500, please state whether EasyComp is making a profit or a loss? Next, please describe how large the profit or loss is and show your analysis. (criteria: analysis of numerical data or observable facts)

e. Sketch a graph with MR, MC, and ATC curves to illustrate your answer and show the profit or loss. (criteria: manipulation of numerical data or observable facts)

f. Would you advise EasyComp to stay in business or shut down the business based on the shown profit or loss? Please justify your conclusion! (criteria: informed conclusion)

g. Based on the knowledge gained from the above analysis, what must any future computer company that wants to enter this perfectly competitive market make sure it can do in order to be profitable? (criteria: informed conclusion)

h. If the market structure were to change from perfect competition to monopolistic competition, what would the now monopolistically competitive computer company EasyComp have to do in order to become more profitable compared to its peer computer companies? (criteria: informed conclusion)