Microeconomics Course Assignment

In fulfillment of Course ePortfolio and CSIS requirement

This Assignment is required and totals 50 points

Part 1 Perfect Competition Analysis

Using the spread sheet data below complete the following steps:
1. Copy and paste the spread sheet data below to (Sheet 2)
2. Title this spread sheet: Costs of Production and Profit Maximization Analysis for the Perfect Competitive Market Structure
3. Place boarders around each cell in the spread sheet.
4. Expand the column titles for each of the 8 columns (ie) (TFC) = Total Fixed Costs (TFC). Make certain the titles are stacked and centered.
5. Be certain to BOLD all titles used throughout assignment
6. Calculate the appropriate fomula for each cell of the 8 blank columns
-(ATC) should be rounded to (2.00) decimals - no need to show dollar ($) signs
-All other columns should be single (5) or double digit (17) format

Construct the following Smooth Line Graphs:

a) A graph that compares: MC, ATC, AVC, AFC. Title this graph: Average Costs of Production. Be certain to appropriately label axis (10pt font)
b) A graph that compares: TC, TVC, TFC. Title this graph: Total Costs of Production. Be certain to appropriately label axis (10pt font)
c) A graph that compares: TR with TC. Title this graph: Profit Maximization. Using the data spreadsheet determine what level of production is the most
profitable. Insert a colored, vertical line that indicates this Profit Maximizing point. Shadow the line. Be certain to appropriately label axis (10pt font)
d) A graph that compares: ATC, MC, and MR. Title this graph: Measuring Total Profits. Insert a colored, shadowed, vertical line indicating at what level of
production total profits are the greatest. Align this graph (d) under graph (c) at the appropriate profit maximizing production level.
Be certain to appropriately label the axis (10pt font)
e) On the completed spreadsheet data: high light (color) the entire row showing the proift maxizing level of production
f) On (e) above: Insert (arrowhead lines) indicating where MC = MR. Connect these arrows to a side-bar label: Marginal Costs = Marginal Revenue.
g) On (e) above: Insert (arrowhead lines) indicating where Maximum Profit at profit maximizing output. Connect these arrows to a side-bar label:
Maximum Profit at Profit Maximizing Output.
h) Each grpah should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be found under the tab: Chart Tools,
Format, and Layout.
i) Insert a (Text Box) and answer the following questions:
1. Explain in your own words why MC=MR is a profit maximizing production level ?
2. Assume prices dropped to $4.25. What then would be the profit maximizing or loss minimizing level of production ?
3. Should the firm continue to operate at this point?

Total
Output/hr
0
1
2
3
4
5
6
7
8
9
10
11

(TFC)
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

(TVC)
$0
7
10
12
13
15
18
22
27
33
40
48

(TC)

(AFC)

(AVC)

(ATC)

(MC)

Market
Price
Perfect
Competitio Total
n
Revenue
$5

Total
Profit

(MR)

Part 2 Monopoly Profitability Analysis

Using the spread sheet data below complete the following steps:
1. Copy and paste the spread sheet data below to (Sheet 3)
2. Title this spread sheet: Monopoly Profit Maximizing Analysis
5. Be certain to BOLD all titles and Axis used throughout assignment
6. Calculate the appropriate fomula for each cell of the (5) blank columns
-Each cell should show (2.00) decimal places value

Construct the following Smooth Line Graphs:

a) A graph that compares: Price/Unit Demand, Marginal Cost, Marginal Revenue, and Average Total Costs. Title this graph: Monopoly Profit
Determination. Be certain to appropriately label axis (14pt font)
b) Add to graph(a): colored dashed lines indicating (1) most profitable price level, (2) profit maximizing output, (3) ATC level. Also indicate the "area of
monopoly profitablility" by typing the words Monopoly Profit
c) Add to graph(a): arrows indicating Demand Price juncture, MC=MR, Average Total Costs. Connect these arrows to side-bar labels for each.
d) A graph that compares: TR with TC. Title this graph: Revenue - Cost Comparison. Be certain to appropriately label axis as well as TR and TC curves. (14pt
font)
e) On the completed spreadsheet data: high light (color) the entire row(s) showing the proift maxizing level (range) of production
f) Each grpah should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be found under the tab: Chart Tools,
Format, and Layout.
g) Insert a (Text Box) and answer the following question:
1. Explain in your own words why MC=MR is a profit maximizing production level for the Monopoly
2. Explain how the monoploist determines where to price his product
3. A monopoly is considered an inefficient use of resources for what two reasons?

Microeconomics Course Assignment

In fulfillment of Course ePortfolio and CSIS requirement

Part 2
Total
Output
Units
0
1
2
3
4
5
6
7
8
9
10
11
12

Price Per
Unit
(Demand)
$8.00
$7.80
$7.60
$7.40
$7.20
$7.00
$6.80
$6.60
$6.40
$6.20
$6.00
$5.80
$5.60

(TR)

(TC)
10.00
14.00
17.50
20.75
23.80
26.70
29.50
32.25
35.10
38.30
42.70
48.70
57.70

(TP)

(ATC)

(MC)

(MR)

4pt

Costs of Production and Profit Maximization Analysis for the Perfect Competitive Market Struc
Market
Total
Average
Price
Total
Total
Variable
Fixed Average Average
Perfect
Output/h Fixed
Costs Total Cost Cost
Variable Total Cost Marginal Competiti Total
r
Cost (TFC) (TVC)
(TC)
(AFC) Cost(AVC) (ATC) Cost (MC)
on
Revenue
0
$10
$0
$10
0
0
0
$0
$5
1
$10
7
$17
$10
7
17.00
7
$5
$5
2
$10
10
$20
$5
5
10.00
3
$10
$5
3
$10
12
$22
$3
4
7.33
2
$15
$5
4
$10
13
$23
$3
3
5.75
1
$20
$5
5
$10
15
$25
$2
3
5.00
2
$25
$5
6
$10
18
$28
$2
3
4.67
3
$30
$5
7
$10
22
$32
$1
3
4.57
4
$35
$5
8
$10
27
$37
$1
3
4.63
5
$40
$5
9
$10
33
$43
$1
4
4.78
6
$45
$5
10
$10
40
$50
$1
4
5.00
7
$50
$5
11
$10
48
$58
$1
4
5.27
8
$55
$5

Total Cost of
$70

18
16
14
12
10
8
6
4
2
0

$60
Average Fixed Cost
(AFC)
Average Variable
Cost(AVC)
Average Total Cost
(ATC)
Marginal Cost (MC)

Output

Profit Maximization
$70
$60
Revenue and Costs

$50
$40
$30
$20
$10
$0
1 2 3 4

1 2 3 4 5 6 7 8 9 10 11 12

$50
$40
$30

Dollar Costs

Production Cost

Average Cost of Production

Total Cost (TC)

Revenue and Costs

$30

Total Cost (TC)

$20

Total Revenue

$10
$0
1

10 11 12

Output

Price and Cost Per Unit

Measuring Total Profits.

18
16
14
12
10
8
6
4
2
0

Average Total Cost

(ATC)
Marginal Cost (MC)
Marginal Cost(MR)

Output

9 10 11 12

petitive Market Structure

Total
Profit
($10)
($12)
($10)
($7)
($3)
$0
$2
$3
$3
$2
$0
($3)

Marginal
Cost(MR)
5
5
5
5
5
5
5
5
5
5
5

Total Cost of Production

Total Fixed Cost (TFC)

Total Variable Costs
(TVC)
Total Cost (TC)

4 5 6 7 8 9 10 11 12
Output