Short run cost structure and production decisions of Joe's Barbershop Assume a perfectly competitive market; the...

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Short run cost structure and production decisions of Joe's Barbershop Assume a perfectly competitive market; the point of this exercise is to decide how much should Joe produce of barbering services when the market price is as the following questions propose. (Use textbook jargon and explain the typical actions of the firm.) Complete all parts to this assignment and answer all questions. To understand how costs must be considered in the operation of a firm in the short run, (i) Complete the cost structure table on the next page; (ii) Initially assuming a price of $4.00 construct a graph showing the total cost, total variable cost, and a revenue; identify breakeven quantity; (iii) Continuing to assume a price of $4.00 construct a graph showing the average fixed cost, average variable cost, average total cost, marginal cost, and a price line; identify breakeven quantity; (iv) Complete analysis at four different price levels; explain whether or not a firm would produce (and at what level, with what consequence) and when it would shut down-depending on which of four different prices were occurring in the market for the good. The analysis should include an explanation of how the perfectly competitive firm comes to a decision as to what production quantity maximizes profits or minimizes losses. The "consequence" would be related to whether profits, losses, entry of rivals, or exit of existing firms would occur- in the short run and in the long run. A. B. C. D. At a price equal to $4.00? Explain your decision. At a price equal to $3.00? Explain your decision. At a price equal to $2.00? Explain your decision. At a price equal to $1.00? Explain your decision. WRITTEN ASSIGNMENT #3: Cost & Production Total Total Revenue Profit Revenue Profit Total Revenue Total Profit Revenue Profit Quantity FC VC TC AFC AVC ATC MC ($4) ($4) ($3) ($3) ($2) ($2) ($1) ($1) $ 20 $ $ 20 X x X 0 10 20 10 22 20 15 20 20 22 30 20 33 40 20 50 50 20 60 20 90 70 20 117 80 20 148 90 20 183 100 Short run cost structure and production decisions of Joe's Barbershop Assume a perfectly competitive market; the point of this exercise is to decide how much should Joe produce of barbering services when the market price is as the following questions propose. (Use textbook jargon and explain the typical actions of the firm.) Complete all parts to this assignment and answer all questions. To understand how costs must be considered in the operation of a firm in the short run, (i) Complete the cost structure table on the next page; (ii) Initially assuming a price of $4.00 construct a graph showing the total cost, total variable cost, and a revenue; identify breakeven quantity; (iii) Continuing to assume a price of $4.00 construct a graph showing the average fixed cost, average variable cost, average total cost, marginal cost, and a price line; identify breakeven quantity; (iv) Complete analysis at four different price levels; explain whether or not a firm would produce (and at what level, with what consequence) and when it would shut down-depending on which of four different prices were occurring in the market for the good. The analysis should include an explanation of how the perfectly competitive firm comes to a decision as to what production quantity maximizes profits or minimizes losses. The "consequence" would be related to whether profits, losses, entry of rivals, or exit of existing firms would occur- in the short run and in the long run. A. B. C. D. At a price equal to $4.00? Explain your decision. At a price equal to $3.00? Explain your decision. At a price equal to $2.00? Explain your decision. At a price equal to $1.00? Explain your decision. WRITTEN ASSIGNMENT #3: Cost & Production Total Total Revenue Profit Revenue Profit Total Revenue Total Profit Revenue Profit Quantity FC VC TC AFC AVC ATC MC ($4) ($4) ($3) ($3) ($2) ($2) ($1) ($1) $ 20 $ $ 20 X x X 0 10 20 10 22 20 15 20 20 22 30 20 33 40 20 50 50 20 60 20 90 70 20 117 80 20 148 90 20 183 100