Question 1

Labor

(workers)

0, 1, 2, 3, 4, 5

Total product

(shirts per day)

0, 20, 36, 48, 56, 60

For these questions answer with just a number with decimals if necessary (ie. 3.23), no symbols, units, or fractions.

1. The marginal product of the 3rd worker isBLANK.

2. Randy's average fixed cost if 48 shirts are produced isBLANK.

3.Randy's average variable cost if 56 shirts are produced isBLANK.

4.Randy's marginal cost of producing the 52nd sweater isBLANK.

5. Randy's average total cost if 48 sweaters are produced isBLANK.

Question 2

We are considering a perfectly competitive market for detergent.Marketdemand for detergent is

Qd= 400 - 5P

(Demand for each individual firm is still perfectly elastic, they regard prices as fixed.)

Each firm's short run supply curve is

q= 2 +P/2

Refer to the table below for the average variable costs and the fixed costs in which each single firm incurs while producing a given quantity

Quantity (q)

5, 6, 7, 8, 9

AVC

1, 2, 3, 4, 5

FC

36, 36, 36, 36, 36

1. The total market supply curve when 74 such firms are producing at the same time isBLANK(Answer in the format of a formula that reads as Q=(number)+(number)P )

2. The equilibrium quantity isBLANKand equilibrium price isBLANK.

3. The profit made by each firm isBLANK.

4. In the long run, the number of firms willBLANK (Select between: increase or decrease).

Question 3

Consider the following demand curve: P = 24 - Qd, which implies that MR= 24 - 2Qd.

Now consider a Monopoly with TC and MC given, respectively, by

TC = Q2+ 36,

MC = 2Q,

where Q is the quantity supplied by the monopolist.

Answer with (integers) only in the numerical questions and (True) or (False) in the last two

1.Consider a single price monopoly. The optimal monopoly price isBLANKand the quantity isBLANK.

2. The economic profit of the monopoly isBLANK. Consumer surplus would beBLANKand producer suplus would beBLANK.

3.In a perfectly competitive industry such that MC=P (with the same costs and same demand), the quantity produced would beBLANKand the price would beBLANK. Consumer surplus would beBLANK and producer surplus would beBLANK.

4.If the firm could charge each customer a different price ("perfect price discrimination") equal to their willingness to pay, the monopoly would produce quantityBLANKand obtain a profit ofBLANK. Consumer surplus would beBLANKand producer surplus would beBLANK.

5. True or False: the perfectly discriminatory market is efficientBLANK.

6. True or False: a price ceiling would improve efficiency in the monopoly caseBLANK.