This assignment asks you to derive and plot cost curves for a firm. It then asks you to look at the production decisions of that firm in various settings. Everybody's firm will be a little different. Let the 9th digit of your student number be a and the 8th digit of your student number be B. Fixed cost (FC) and marginal costs (MC) for your firm are given by: FC = 50 + 50x MC = (8+1)Q where Q is the firm's level of output. Questions 1. Firm's Costs: Complete the table below using Excel, Google Sheets or similar software for values of @ from 0 to 20: FC MC VC TO AFC AVC ATC 19 20 where VC is total variable cost, TC is total cost, AFC is average fixed cost, AVC is average variable cost and ATC is average total cost. Plot The MC, AFC, AVC and ATC curves on a single graph. 2. Competitive Market: Suppose that your firm is one of a number of identical firms operating in a competitive industry. The current price in that market is given by Pop. Use your value of B and the table below to look up PSR B 1 2 2 3 4 5 6 7 8 9 10 PER 14 18 24 28 30 36 35 40 36 50 (a) Produce a new graph that plots this price along with the MC and ATC curves. (b) How many units does your firm produce? Mark this level of output on your graph. (c) Does your firm make a profit, a loss or breakeven in the short-run? Calculate the profit /loss.{d} Based on your answer above. would you expect to see entry, exit or no change in the number of rms as we move to the longrun? 011 your graph indicate the longrun price {fin} {e} Assume that market demand is given by: Q\" = 111-111;:- 2P Recall that all rms are identical in this industry. How many units does each rm produce, and how many rms are operating in this market in the longrun? 3. Monopoly Now suppose that your rm is operating as a monopolist in an industry where the demand curve is given by m=ase where A depends on your value of ,8 and can be found in the table below: a 1 s 3 4 s s T s a 10 33 an as 4a to 34 112 144 at 11c 132 {a} Complete the table below for values of Q from [1' to El], where PM is the monopoly price1 TR is total revenue1 AR is average revenue and MR is marginal revenue. 1;} PM TR AR MR ' lit-GHQ 19 El] [b] Produce a graph that shows the demand curve, the rm's marginal revenue curve, and the rm's marginal cost and average total cost curves that you found in question one. {c} 1F.l'-.I'l:1at is the prot maximising level of output for your monopolist and how much prot does it make? {d} Suppose your rm was run by a benevolent social planner. How much would it produce and what is the deadweight loss of monopoly in this industry. Illustrate this on your diagram. Make sure you adhere to the following: I 1You must submit electronically via CUIeam by 11:55pm on November 29th., 5113!]. I Submit one PDF le that contains your typed answers to the questions and your gures. n In addition either submit a 2nd [spreadsheet] le that contains your tables from questions {I} and {3}, or include a link to a spreadsheet with those tables in your PDF document. I Add a cover page which includes your name and student number1 and reports the numerical values of o.- and ,3 that you use. If you are including a link to a spreadsheet please put this on the cover page. 9. Refer to the above graph. It represents a profit-maximizing firm producing under conditions of pure competition. When the firm is in equilibrium in the short run, its average variable cost is: A EH B. DE C. DH D. DE 10. Refer to the above graph. It represents a profit-maximizing firm producing under conditions of pure competition. When the firm is in equilibrium in the short run, the amount of economic profit per unit is: A EH B. DE C. DH D. DB. S Output 11. Refer to the above graph. It shows the short-run cost curves for a purely competitive firm together with a number of different prices. At what price is the firm making only normal profit? AP B. A C. A D. A. 12. Refer to the above graph. It shows the short-run cost curves for a purely competitive firm together with a number of different prices. At what price is the firm making an economic profit? AA C. A D. A MC P ATC D D Firm Industry17. Refer to figure above. The above figure shows the demand, marginal cost (MC) and average total cost (ATC) curves for Jason's House of Apples. Which of the following statements is true? A) Jason should produce where MC equals $3 (point d) where he will minimize his losses. B) Jason should produce where the distance between MC and his demand curve is greatest (point b) C) Jason cannot carn a profit from selling any number of apples. Jason should produce where MC equals $3 (point d) where he will maximize his profit. 18. What is the relationship among the following variables in for a perfectly competitive firm: the market price, average revenue and marginal revenue? A) Average reverme is equal to the market price; average revenue is greater than marginal revenue. B) The market price is equal to both average revenue and marginal revenue. C) Average revenue is equal to marginal revenue: average revenue is greater than the market price. D) As a firm lowers the market price to sell more output, marginal revenue and average revenue will be less than the market price. 19. Which of the following statements is true? A) A long-run competitive equilibrium can only be achieved in constant-cost industries. B) When an industry achieves a long-run competitive equilibrium, industry output will not change in the future. C) A long-run competitive equilibrium outcome is not economically efficient D) When an industry reaches a long-run competitive equilibrium, the typical firms in the industry breaks even. 10. Assume that a perfectly competitive market is in long-rum equilibrium. Suppose as a result of a health hazard associated with the industry's product. demand decreases drastically. What is the mumediate result of this event? A) The market price falls and the typical firm suffers an economic loss. B) The market supply increases to offset the fall in demand. () The typical firm's average total cost curve shifts downward. D) The typical firm's marginal cost curve shifts to the left. 21. Which phrase would be most characteristic of pure monopoly? A. Close substitutes B. Efficient advertiser C. Price taker D. Single seller1. Which of the following is a characteristic of a firm in a perfectly competitive market? A) The firm cannot make a profit in the short run because it is too small a part of the total market. B) The firm can make a profit in the long run but not in the short run. C) The firm can sell as much as it wants without having to lower its price. D) The firm must lower its price in order to increase quantity demanded. 1. Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry? A) The market demand curve is a horizontal line; the firm's demand curve is downward-sloping B) The market demand curve is downward-sloping: the firm's demand curve is a vertical line. C) The market demand curve can not have a constant slope; the firm's demand curve has a slope equal to zero. D) The market demand curve is downward-sloping: the firm's demand curve is a horizontal line. Given the table below. what is the short-run profit-maximizing level of output for the firm? Output Total Revenue Total Cost $4 B 12 16 20 A. 2 units B. 3 units C. 4 units D. 5 units 4. Suppose the equilibrium price in a perfectly competitive industry is $10 and a finn in the industry charges $12. Which of the following will happen? A) The firm will sell more output than its competitors. B) The firm's revenue will increase. C) The firm will not sell any output. D) The firm's profits will increase 5. To maximize profit, a perfectly competitive firm 1. should sell the quantity of output determined by the interaction between industry demand and supply. 2. should sell the quantity of output that results in a value for total revenue that is equal to total cost. 3. should produce the quantity of output that results in the greatest difference between total revenue and total cost. should produce the quantity of output that results in the greatest difference between marginal revenue and marginal cost. 6. If a firm shots down it A) will suffer a loss equal to its fixed costs, B) will produce nothing but must pay its variable costs. C) will produce nothing but must pay its fixed and variable costs, D) will earn enough revenue to cover its variable costs but not all of its fixed costs