Question

A perfectly competitive firm has the following total cost and marginal cost functions:

TC = 100 +
10q – q^{2} + (1/3)q^{3}

MC =
q^{2} – 2q +10

a) For quantities from 0 to 10 determine: TC, TFC, TVC, and MC.

b) For quantities from 0 to 10 determine: ATC, AFC, and AVC.

c) Assume P (MR) equals 45. For quantities from 0 to 10 determine: TR and profit.

d) At what quantity is profit maximized? At this quantity what is true about the relationship between MC and MR?

Answer #1

a., b., c.

Q | TFC | TVC | TC | MC | ATC | AFC | AVC | P | TR | Profit |

0.00 | 100.00 | 0.00 | 100.00 | 45.00 | 0.00 | -100.00 | ||||

1.00 | 100.00 | 9.33 | 109.33 | 9.33 | 109.33 | 100.00 | 9.33 | 45.00 | 45.00 | -64.33 |

2.00 | 100.00 | 18.67 | 118.67 | 9.33 | 59.33 | 50.00 | 9.33 | 45.00 | 90.00 | -28.67 |

3.00 | 100.00 | 30.00 | 130.00 | 11.33 | 43.33 | 33.33 | 10.00 | 45.00 | 135.00 | 5.00 |

4.00 | 100.00 | 45.33 | 145.33 | 15.33 | 36.33 | 25.00 | 11.33 | 45.00 | 180.00 | 34.67 |

5.00 | 100.00 | 66.67 | 166.67 | 21.33 | 33.33 | 20.00 | 13.33 | 45.00 | 225.00 | 58.33 |

6.00 | 100.00 | 96.00 | 196.00 | 29.33 | 32.67 | 16.67 | 16.00 | 45.00 | 270.00 | 74.00 |

7.00 |
100.00 | 135.33 | 235.33 | 39.33 | 33.62 | 14.29 | 19.33 | 45.00 | 315.00 | 79.67 |

8.00 | 100.00 | 186.67 | 286.67 | 51.33 | 35.83 | 12.50 | 23.33 | 45.00 | 360.00 | 73.33 |

9.00 | 100.00 | 252.00 | 352.00 | 65.33 | 39.11 | 11.11 | 28.00 | 45.00 | 405.00 | 53.00 |

10.00 | 100.00 | 333.33 | 433.33 | 81.33 | 43.33 | 10.00 | 33.33 | 45.00 | 450.00 | 16.67 |

d. quantity =7 at profit maximization. At this quantity MC = MR

Consider the following table of numbers, which represents demand
and cost conditions for a perfectly competitive firm. The market
price is 600$
(a) Fill in the missing values.
(b) What level of output should the firm produce? Explain.
(c) What do you expect to happen in this industry in the long
run? Explain.
Q
TFC
AFC
TVC
AVC
TC
ATC
MC
TR
MR
Profit
0
xxxx
0
xxxx
570
xxxx
xxxx
xxxx
1
570
240
2
430
3
670
4...

3. Cost Tables
(a) Fill in the following table, where TFC = Total Fixed Cost,
TVC = Total Variable Cost, TC = Total Cost, AFC = Average Fixed
Cost, AVC = Average Variable Cost, ATC = Average Total Cost, and MC
= Marginal Cost. Remember the following relationships:
TFC + TV C = TC
AF C = T F C/Q, AV C = T V C/Q, AT C = T C/Q
MC = ∆TC ∆Q
Output (Q)
TFC
TVC
TC...

A perfectly competitive firm in the short run has Total Cost and
Marginal Cost functions given by TC(Q)=9+Q+Q2 and
MC(Q)=1+2Q, respectively. The firm faces a price of P=$17.
Determine the output that the firm will produce and the profit.
Show the solution graphically.

Given the following information about a firm’s costs,
complete the following chart. Graph the TC, TFC and TVC on one
graph and directly below it (stack) a graph with the ATC, AFC, AVC
& MC.
Q
TC
TFC
TVC
ATC
AFC
AVC
MC
0
$2,500
--
25
20.00
50
$900
75
$49.33
100
15.00
125
$2,000
150
$5,050
175
$32.29
200
19.00

Problem 1. The following are the hypothetical data of costs and
revenues of DIAMOND CANNING CO. , Tambler , General Santos
City.
QUANTITY
TVC
TFC
TC
ATC/AC
AVC
AFC
MC
PRICE
TR
0
0
5,000
0
5000
8,500
5,000
5
10,000
19,000.
5,000
4
15,000
24,000
5,000
3
20,000
36,000
5,000
2
25,000
45,000
5,000
1
Requirements: Solve the different types of costs and complete
the table. Using the graphing paper graph the following.
Graph all total costs ; TC,...

Fill in the table for a perfectly competitive firm.
Output
VC
TC
AVC
AFC
ATC
MC
P
TR
PROFIT
0
100
---
---
---
---
50
1
25
50
2
20
3
53.3
4
17.5
5
90
6
30
7
265
8
41.3
9
35
10
425
A perfectly competitive firm’s demand curve is perfectly
elastic.

Q2: Complete the following table. Show costs to 2 decimal places
if they are not whole numbers. Hint: Start with the second row.
Q (units)
TFC ($)
AFC ($/unit)
TVC ($)
AVC ($/unit)
TC ($)
ATC ($/unit)
MC ($/unit)
11
$858
$158
12
$90
$140
Q3: Complete the following table. Hint: Start with the first
row.
Q (units)
TFC ($)
TVC ($)
TC ($)
AFC ($/unit)
AVC ($/unit)
ATC ($/unit)
MC ($/unit)
0
$1,800
–
–
–
–
1...

GIVEN THE FOLLOWING BELOW, please answer problem 1 and problem
2. The values are already given, all you need is to graph.
The following are the hypothetical data of costs and
revenues.
QUANTITY
TVC
TFC
TC = TVC + TFC
ATC/AC = TC/QTY
AVC = TVC/QTY
AFC = TFC/QTY
MC
PRICE
TR = PRICE X QUANTITY
0
0
5,000
5,000
0
0
0
0
0
5000
8,500
5,000
13,500
2.7
1.7
1
8,500
5
25,000
10,000
19,000.
5,000
24,000
2.4...

Profit Maximization for a Perfectly Competitive
Firm
Goal: To determine how much candy George’s
company should produce to make the maximum profit it can possibly
make.
What you must know in order to successfully complete
this assignment:
The definition of profit and how to calculate it.
The definitions of Total Cost (TC), Total Variable Costs (TVC)
Total Fixed Costs (TFC), and Marginal Costs (MC) and how to
calculate them.
The definitions of Total Revenue (TR) and Marginal Revenue (MR),
how...

Labour (hrs)
(Input)
TP
(Output)
AP
(Avg. Product)
MP
TVC
TFC
TC
(Total Cost)
AVC
ATC
MC
0
0
9
35
222
15
50
22
70
30
85
39
100
48
110
Complete the table above, assuming that the labour costs
are $8 / hr
What is the point of maximum productivity :
____ units of labour (input)
What is the AVC _____ and ATC
_____ at this quantity?
What is the quantity of diminishing returns?
____
What is the...

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