Natural Salt is one of the 350 price-taker firms in Country X producing and selling salt....

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Natural Salt is one of the 350 price-taker firms in Country X producing and selling salt. The market price of salt is $16 per bag and Natural Salt has a fixed production cost of $13,000. The firm's variable cost schedule is shown in following table. Quantity (bag) 0 Quantity (bag) 1,500 2,000 2,500 3,000 3,500 Total Variable Cost ($) Total Revenue ($) 0 10,500 12,000 20,000 (a) Construct ONE new table based on the above data, which includes the following columns to calculate Natural Salt's total revenue, average variable cost, average total cost and marginal cost. Round your answers to one decimal place if applicable. (4 marks) 30,000 42,000 Average Variable Cost ($) Average Total Cost ($) Marginal Cost ($) (b) What is the competitive equilibrium condition of a price-taker firm? Determine the profit- maximizing output, price and economic profit (loss) of Natural Salt. (4 marks) (c) Draw a set of market-firm diagram to illustrate the situation of Natural Salt. Label the critical points with relevant figures, including the equilibrium price, equilibrium quantity, marginal revenue, profit maximizing quantity, average total cost and average variable cost at the profit maximizing quantity. Label the area of profit (loss) too. No workings and explanation are needed. (6 marks) (d) Suppose many new salt producers enter the market and so the Natural Salt is in bad times now. In spite of this, the firm will continue the operation in the short run. Explain and illustrate these changes in the same diagram of part (c). (6 marks) Natural Salt is one of the 350 price-taker firms in Country X producing and selling salt. The market price of salt is $16 per bag and Natural Salt has a fixed production cost of $13,000. The firm's variable cost schedule is shown in following table. Quantity (bag) 0 Quantity (bag) 1,500 2,000 2,500 3,000 3,500 Total Variable Cost ($) Total Revenue ($) 0 10,500 12,000 20,000 (a) Construct ONE new table based on the above data, which includes the following columns to calculate Natural Salt's total revenue, average variable cost, average total cost and marginal cost. Round your answers to one decimal place if applicable. (4 marks) 30,000 42,000 Average Variable Cost ($) Average Total Cost ($) Marginal Cost ($) (b) What is the competitive equilibrium condition of a price-taker firm? Determine the profit- maximizing output, price and economic profit (loss) of Natural Salt. (4 marks) (c) Draw a set of market-firm diagram to illustrate the situation of Natural Salt. Label the critical points with relevant figures, including the equilibrium price, equilibrium quantity, marginal revenue, profit maximizing quantity, average total cost and average variable cost at the profit maximizing quantity. Label the area of profit (loss) too. No workings and explanation are needed. (6 marks) (d) Suppose many new salt producers enter the market and so the Natural Salt is in bad times now. In spite of this, the firm will continue the operation in the short run. Explain and illustrate these changes in the same diagram of part (c). (6 marks)

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d Given that a 350 pricetaker Market price fixed production cost 13... View the full answer