1. Analyze and calculate short-run costs 2. Interpret graphs of short-run cost curves and their relationship...

 

Transcribed Image Text:

1. Analyze and calculate short-run costs 2. Interpret graphs of short-run cost curves and their relationship 3. Name and explain the characteristics of a perfectly competitive market 4. Determine the profit-maximizing/loss minimizing quantity in the short-run and long-run 5. Calculate profits or losses by comparing total revenue and total cost at the profit-maximizing or loss minimizing quantity 6. Identity profits or losses on a graph with the average cost curves 7. Explain the shutdown rule and identify the shutdown point Assuming that syrups are identical products and firms are facing perfect competition in the market. The table records the production schedule for Sweet Syrup Inc. from 0 to 12 bottles and their corresponding total costs on a certain day. The market price for each bottle of syrup is selling at $8 each. Quantity (Q) Bottles per day 0 1 2 3 4 5 6 Total Cost (TC) $ 15 22 27 30 32 33 34 Marginal Cost (MC) $ Total Revenue (TR) $ Marginal Revenue (MR) $ Total profit/loss $ 1 Quantity (Q) Bottles per day 7 8 9 10 11 12 Total Cost (TC) $ 36 40 44 51 60 76 Marginal Cost (MC) $ 4 4 Total Revenue (TR) $ 64 72 Marginal Revenue (MR) $ 3. (1 point) How much is the profit at this quantity? (Box will expand as you type) 8 8 The answers at 8 and 9 bottles are provided. Apply the correct formulas and demonstrate how you calculated the answers for these two rows. (Box will expand as you type) 2. (1 point) At which quantity of production will Sweet Syrup maximize profit? (Box will expand as you type) Total profit/loss $ 1. (3 points) From the given information, apply the corresponding formula to calculate the marginal cost, total revenue, marginal revenue, and total profit/loss at each production quantity. Fill the table with all the answers of MC, TR, MR, and profit or loss on each row. 24 28 4. (3 points) Describe this profit maximizing decision by means of marginal analysis (comparing marginal revenue and marginal cost). (Box will expand as you type) Part 1: Graphical Analysis of Perfect Competition Use the graph to answer questions 5 and 6 Revenue and cost (dollars per bushel) 5 сл 4 3 ليا 2 MC ATC (Box will expand as you type) AVC 10 20 30 40 50 Output (thousands of bushels per year) Figure 1.1 A Price Taker's Wheat Production and the Average Costs Curves 5. (2 points) How many bushels of wheat does the farmer produce if the price is $3 per bushel? Explain why the quantity in terms of a price-taker decision and marginal analysis. 6. (2 points) If the price falls to $1.50 per bushel in the next season, based on the shutdown rule and assuming other things stay the same, should the wheat farmer stay open or shut down in the next season? Explain in terms of revenue, fixed cost, and variable cost, and the shut-down rule. Price and cost (dollars per room) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0 100 200 MC (Box will expand as you type) ATC D MR 300 400 500 Quantity (rooms per day) Figure 3.1 A Motel Business in Monopolistic Competition 1. The above figure represents a motel business in a market of monopolistic competition. The graph shows the quantity demanded for a single-bedroom at different pricing. It also provides the information of the marginal revenue, the average total cost, and the marginal cost. a. (1 point) How many rooms per day will the motel make the highest profit? b. (1 point) What price can the motel charge at this quantity demanded? c. (2 points) Calculate the total revenue and total cost at this profit-maximizing quantity. d. (1 point) How much is the total profit per day the motel can make? Questions 1 and 2 are matching learning objectives of section 11.1 Identifying Monopolistic Competition and Oligopoly by finding 4-Firms Concentration Ratio and the Herfindahl Hirshman Index. Question 3 is matching learning objectives of section 10.1 Identifying Monopolistic Competition. Firm A B C D Revenue (millions of dollars) 8 7 3 2 1. The above table shows the revenues of the four largest firms in an industry. There are other smaller firms that are not listed in the table. The total revenue of all the firms in the industry is $80 million. The firms are selling similar but slightly different products from one another. a. (2 points) Calculate the four-firm concentration ratio of this industry. b. (1 point) Considering the four-firm concentration ratio and the characteristics of the industry, which market structure does it most likely represent? (Box will expand as you type) 2. (2 points) An industry has only four firms, who have market shares of 62 percent, 15 percent, 15 percent, and 8 percent. Calculate the Herfindahl-Hirschman Index for this industry. Which market structure does it most likely represent? (Box will expand as you type) 3. (3 points) Based on the characteristics of monopolistic competition in sections 10.1, provide a real-world example of monopolistic competition in your community. Describe the products and firms. What characteristics does the market exhibit that make it a monopolistic competition? 1. Analyze and calculate short-run costs 2. Interpret graphs of short-run cost curves and their relationship 3. Name and explain the characteristics of a perfectly competitive market 4. Determine the profit-maximizing/loss minimizing quantity in the short-run and long-run 5. Calculate profits or losses by comparing total revenue and total cost at the profit-maximizing or loss minimizing quantity 6. Identity profits or losses on a graph with the average cost curves 7. Explain the shutdown rule and identify the shutdown point Assuming that syrups are identical products and firms are facing perfect competition in the market. The table records the production schedule for Sweet Syrup Inc. from 0 to 12 bottles and their corresponding total costs on a certain day. The market price for each bottle of syrup is selling at $8 each. Quantity (Q) Bottles per day 0 1 2 3 4 5 6 Total Cost (TC) $ 15 22 27 30 32 33 34 Marginal Cost (MC) $ Total Revenue (TR) $ Marginal Revenue (MR) $ Total profit/loss $ 1 Quantity (Q) Bottles per day 7 8 9 10 11 12 Total Cost (TC) $ 36 40 44 51 60 76 Marginal Cost (MC) $ 4 4 Total Revenue (TR) $ 64 72 Marginal Revenue (MR) $ 3. (1 point) How much is the profit at this quantity? (Box will expand as you type) 8 8 The answers at 8 and 9 bottles are provided. Apply the correct formulas and demonstrate how you calculated the answers for these two rows. (Box will expand as you type) 2. (1 point) At which quantity of production will Sweet Syrup maximize profit? (Box will expand as you type) Total profit/loss $ 1. (3 points) From the given information, apply the corresponding formula to calculate the marginal cost, total revenue, marginal revenue, and total profit/loss at each production quantity. Fill the table with all the answers of MC, TR, MR, and profit or loss on each row. 24 28 4. (3 points) Describe this profit maximizing decision by means of marginal analysis (comparing marginal revenue and marginal cost). (Box will expand as you type) Part 1: Graphical Analysis of Perfect Competition Use the graph to answer questions 5 and 6 Revenue and cost (dollars per bushel) 5 сл 4 3 ليا 2 MC ATC (Box will expand as you type) AVC 10 20 30 40 50 Output (thousands of bushels per year) Figure 1.1 A Price Taker's Wheat Production and the Average Costs Curves 5. (2 points) How many bushels of wheat does the farmer produce if the price is $3 per bushel? Explain why the quantity in terms of a price-taker decision and marginal analysis. 6. (2 points) If the price falls to $1.50 per bushel in the next season, based on the shutdown rule and assuming other things stay the same, should the wheat farmer stay open or shut down in the next season? Explain in terms of revenue, fixed cost, and variable cost, and the shut-down rule. Price and cost (dollars per room) 100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0 100 200 MC (Box will expand as you type) ATC D MR 300 400 500 Quantity (rooms per day) Figure 3.1 A Motel Business in Monopolistic Competition 1. The above figure represents a motel business in a market of monopolistic competition. The graph shows the quantity demanded for a single-bedroom at different pricing. It also provides the information of the marginal revenue, the average total cost, and the marginal cost. a. (1 point) How many rooms per day will the motel make the highest profit? b. (1 point) What price can the motel charge at this quantity demanded? c. (2 points) Calculate the total revenue and total cost at this profit-maximizing quantity. d. (1 point) How much is the total profit per day the motel can make? Questions 1 and 2 are matching learning objectives of section 11.1 Identifying Monopolistic Competition and Oligopoly by finding 4-Firms Concentration Ratio and the Herfindahl Hirshman Index. Question 3 is matching learning objectives of section 10.1 Identifying Monopolistic Competition. Firm A B C D Revenue (millions of dollars) 8 7 3 2 1. The above table shows the revenues of the four largest firms in an industry. There are other smaller firms that are not listed in the table. The total revenue of all the firms in the industry is $80 million. The firms are selling similar but slightly different products from one another. a. (2 points) Calculate the four-firm concentration ratio of this industry. b. (1 point) Considering the four-firm concentration ratio and the characteristics of the industry, which market structure does it most likely represent? (Box will expand as you type) 2. (2 points) An industry has only four firms, who have market shares of 62 percent, 15 percent, 15 percent, and 8 percent. Calculate the Herfindahl-Hirschman Index for this industry. Which market structure does it most likely represent? (Box will expand as you type) 3. (3 points) Based on the characteristics of monopolistic competition in sections 10.1, provide a real-world example of monopolistic competition in your community. Describe the products and firms. What characteristics does the market exhibit that make it a monopolistic competition?