1. Production, Costs, and Perfect Competition: Firm in the Short Period
a. data:

(1) K = 7 and the price of capital = $2.00

(2) quantity produced 0 1 2 3 4 5 6 7 labor input 0 2 5 9 14 20 27 35 price of labor = $2.00

b. questions:

(1) Derive the ATC, AFC, AVC, and MC curves.

(2) Derive the marginal product schedule for labor and show why it makes the marginal cost curve slope upward.

(3) If the market price is $12.00, how would the firm supply and what would be its economic profits?

(4) If the market price is $2.00, how much would the firm supply and what would be its economic profits?

(5) Derive the firm’s supply curve and explain its shape.

Answer rating: 100% (QA)

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