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You are operating a firm in a perfectly

competitive market A+ Answer

You are operating a firm in a perfectly competitive market A+ Answer

1. (12 Points) You are operating a firm in a perfectly competitive

market. In the short run, you have fixed costs of $30. Your variable
costs are given in the following table:
Q TVC Tc MC
0 0 30
1 70 100 70
2 120 150 50
3 150 180 30
4 190 220 40
5 270 300 80
6 360 390 90
Complete the following table:
2. (10 Points)
A monopolist faces a demand curve given by:
P = 105 3Q, where P is the price of the good and Q is the quantity
demanded. The marginal cost of production is constant and is equal to
$15. There are no fixed costs of production.
A) (2 points) What quantity should the monopolist produce in order to
maximize profit?
B) (2 points) What price should the monopolist charge in order to
maximize profit?
C) (2 points) How much profit will the monopolist make?
D) (2 points) What is the deadweight loss created by this monopoly
(hint: compare the monopoly outcome with the perfectly competitive
outcome).
E) (2 points) If the market were perfectly competitive, what quantity
would be produced?
3. (6 Points)
List the three conditions that must be met in order for a firm to
successfully engage in price discrimination.

4. (12 Points)
Suppose a competitive firm can sell its output for $6 per unit. The
following table gives the firms short run production function.
Labor Output Marginal output MRP = Mp*P
00
1 20 20 20*6=120
2 50 30 180
3 90 40 240
4 110 20 120
5 120 10 60
6 124 4 24
In the table below, you will determine several points on the firms
demand curve for labor. To do this, you must determine how many
workers the firm should hire for different values of the wage rate in
order to maximize profit. Complete the table below:

You are operating a firm in a perfectly

competitive market A+ Answer