Question Tow: (26 marks) (B3, D2, D4)

The following data for a small farm operating in a perfectly competitive market are given in the table below. The price is $10 per yogurt.

Q

TC

0

100

10

200

20

280

30

330

40

360

50

380

60

390

70

425

80

500

90

610

100

750

Instructions:

1.Using excel, find (TFC, TVC, AFC, AVC, ATC, MC, TR, AR, MR, and profit). (5 marks)

2.Draw (TC, TVC, and TFC curves) and explain the relationship between these curves. (4 marks)

3.Using excel, Draw (ATC, AVC, AFC, and MC curves) and explain the relationship between these curves. (6 marks)

4.Determine the optimal level of output and calculate the amount of profit at that level of output.(2 marks)

5.What is the firm's decision at that price? (whether to produce or to shutdown), justify your answer.(3 marks)

6.Show the range of output at which the firm experience IMR and DMR.(2 marks)

7.Using excel, now suppose the price of strawberry yogurt decreases to $5.5 per unit, what is the right decision firm should take, (produce or shutdown) to justify your answer. (4 marks)