PART 1 1. The graph below is for Chic and Sharpe Ltd., a firm in the women's garment industry, which is monopolistically competitive. Cost and revenues 10 20 3O 4O 50 60 70 80 90 10 20 30 4O 50 60 70 80 90 Quantity per period Quantity per period a. Label the four curves in the graph above. Double-click on each of the question marks on the graph and select the correct label. b. What is the profit-maximizing output and price? 0. At the output in (b), what are the amounts of Total cost: $ I ; Total revenue: $ Economic profit: $ d. How much excess capacity exists? units e. What will the presence of economic profits do? l d f. As a result of your answer to (e), the demand curve in the above graph will i v 2. The Costa Rican gimble industry consists of 14 firms whose annual sales are as shown in the table below: Firm Sales (in millions) A 14 3 20 C 7 D 11 E 15 ? 4 Next eight firms (total) 9 a. What is the (four) firm concentration ratio for this industry? Four firm concentration: l % b. In what type of market does the gimble industry operate? Market type: 3 3. Aruna owns Pottery Plus, a small firm that produces terra cotta pots for sale in the Edmonton area. The graph below shows Aruna's demand curve. Price (3) 40 36 32 28 24 20 16 12 8 4 0' 481216202428323640 Quantity per period a. Ifthe rm wishes to maximize its total revenue, at what price should it sell its pots? What is its total revenue? $ ' b. Suppose that the firm were to increase its price by $4 from the price in (a). What will be the change in its total revenue? Give your answer as an absolute number. What is the coefficient for the price elasticity of demand between those two prices? Round your price answer to two decimal places. 0. Suppose that the firm were to decrease its price by $4 from the price in (a). What will be the change in its total revenue? Give your answer as an absolute number. l What is the coefficient for price elasticity of demand between those two prices? Round your price answer to two decimal places. 4. The table below contains some revenue and cost data for the Rising Moon T- shirt Company (quantities for packets of a dozen shirts), which is in long-term equilibrium. a. Complete the blanks in the following table. Round your answers in the "AC" column to 2 decimal places. QuantityPrice TR MR TC IMC AC 0 / $/ / $__26 | / / 1 I 68 If __58 lIl 2 I132 I ,,88 lll 3 I192 I 224 lll 4 I248 ' 264 llI 5 I300 ' 306 lll 6 I348 ' 348 lll 7 I392 I 392 lll 8 I432 I 439 lll b. What is the protmaximizing price and output for Rising Moon? d. At the profit-maximizing output, what are AC and AR? Round your AC answer to 2 decimal places. e. Given your answers above, what type of market must Rising Moon be operating in? Rising Moon must be operating in a I :I' _ 5. the graph below shows the demand for Cosmic shampoo. DJ 60 50 40 Costs and revenues 30 20 10 200 400 600 80 0800, 3500 1200 Quantity per period Suppose there are no fixed costs and marginal cost is a constant $30. a. What are the perfectly competitive price and output? Price: $ Output: b. What are the cartel (monopoly) price and output? Price: $ Output: I c. If there are only four firms in the cartel, what are the price and output of each firm, assuming equal shares? Round your answers to 1 decimal place. Price: $ Output:6. The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry. 20 18 MC 16 AC 14 12 10 Cost and revenues (in dollars) M505 MR 60 120 180 240 300 360 420 Quantity per period a) At the optimal output, what price will Do Drop In charge and what will be its output? b) At the optimal price and output, what will be its total revenue, total cost, and total loss? TR: $ ; TC: $ I Total loss: 33' c) If this rm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level? AVC must be less than $ I . PART 2 1. The graph given below depicts the market for metal kegs