s

|. The data in the table below give information about the price (in dollars) for which a firm can sell a unit of out- put and the total cost of production. a. Fill in the blanks in the table. b. Show what happens to the rm's output choice and profit if the price of the product falls from $60 to $50. R 11' MC MR R MR 17 q P P=60 C P=60P=60P=60P=50P=50P=50 0 60 100 l 60 150 2 60 178 3 60 198 4 60 212 5 60 230 6 60 250 7 60 272 8 60 310 9 60 355 10 60 410 ll 60 475 . Using the data in the table, show what happens to the firm's output choice and profit if the fixed cost of production increases from $100 to $150 and then to $200. Assume that the price of the output remains at $60 per unit. What general conclusion can you reach about the effects of fixed costs on the firm's output choice? .. Use the same information as in Exercise 1. a. Derive the firm's short-run supply curve. (Hint: You may want to plot the appropriate cost curves.) b. It 100 identical firms are in the market, what is the industry supply curve? Suppose you are the manager of a watchmakjng firm operating in a competitive market. Your cost of pro- duction is given by C = 200 + 21f, where q is the level of output and C is total cost. (The marginal cost of pro- duction is 4:}; the fixed cost is $200.) a. If the price of watches is $100, how many watches should you produce to maximize profit? b. What will the profit level be? c. At what minimum price will the firm produce a positive output? .Suppose that a competitive firm's marginal cost of pro- ducing output q is given by MC(q) = 3 + 2:}. Assume that the market price of the firm's product is $9. a. What level of output will the firm produce? b. What is the firm's producer surplus? c. Suppose that the average variable cost of the firm is given by AVC(q) = 3 + q. Suppose that the firm's xed costs are known to be $3. Will the firm be earning a positive, negative, or zero profit in the short run? . A firm produces a product in a competitive industry and has a total cost function C = 50 + 41,] + 2q2 and a marginal cost function MC = 4 + 4g. At the given market price of $20, the firm is producing 5 units of