Microeconomics Course Assignment

This Assignment is worth 40 points

Part 1 Perfect Competition Analysis

Using the spreadsheet data below complete the following steps:

1. Verify that the data from the table below has been pasted to worksheet titled "Part 1".
2. Title this spread sheet: Costs of Production and Profit Maximization Analysis for the Perfe
3. Place boarders around each cell in the spread sheet.
4. Expand the column titles for each of the 8 columns (i.e.) (TFC) = Total Fixed Costs (TFC). Make c
5. Be certain to BOLD all titles used throughout assignment
6. Calculate the appropriate formula 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 c
b) A graph that compares: TC, TVC, TFC. Title this graph: Total Costs of Production. Be certain to a
c) A graph that compares: TR with TC. Title this graph: Profit Maximization. Using the data spread
most profitable. Insert a colored, vertical line that indicates this Profit Maximizing point. Shadow the l
d) A graph that compares: ATC, MC, and MR. Title this graph: Measuring Total Profits. Insert a colo
of production total profits are the greatest. Align this graph (d) under graph (c) at the appropriate pro
Be certain to appropriately label the axis (10pt font)
e) On the completed spreadsheet data: high light (color) the entire row showing the profit maximizi
f) On (e) above: Insert (arrowhead lines) indicating where MC = MR. Connect these arrows to a side
g) On (e) above: Insert (arrowhead lines) indicating where Maximum Profit at profit maximizing outp
Maximum Profit at Profit Maximizing Output.
h) Each graph should include the use of (gradient, texture, and shape effects (preset 2)) of your choi
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
3. Should the firm continue to operate at this point?

Part 1 Data
Market
Total
Price Per
Output/hr
Unit
5
1
5
2
5
3
5
4
5
5
5
6
5

(TFC)
10
10
10
10
10
10
10

(TVF)
7
###
12
13
15
18

(TC)

(AFC)

(AVC)

(ATC)

7
8
9
10
11

5
5
5
5
5

10
10
10
10
10

22
27
33
40
48

Part 2 Monop

eps:

1".
for the Perfect Competitive Market Structure
(TFC). Make certain the titles are stacked and centered.

Using the s

1. Verify that th
2. Title this spr
5. Be certain to
6. Calculate th
-Each cell sh

Construct the

oduction. Be certain to appropriately label axis (10pt font)

Be certain to appropriately label axis (10pt font)
he data spreadsheet determine what level of production is the
. Shadow the line. Be certain to appropriately label axis (10pt font)
s. Insert a colored, shadowed, vertical line indicating at what level
ppropriate profit maximizing production level.

profit maximizing level of production

rrows to a side-bar label: Marginal Costs = Marginal Revenue.
maximizing output. Connect these arrows to a side-bar label:

)) of your choice. Most will be found under the tab: Chart Tools,

a) A graph that
Determination
b) Add to graph
monopoly profit
c) Add to graph
d) A graph that
curves. (14pt fo
e) On the comp
f) Each graph s
Format, and La
g) Insert a (Text
1. Explain in
2. Explain ho
3. A monopo

ss minimizing level of production ?

Part 2 Data

(MC)

Total
Revenue
(TR)

Total
Profit
(TP)

(MR)

Total
Output
Units
1
2
3
4
5
6

7
8
9
10
11
12

2 Monopoly Profitability Analysis

ng the spread sheet data below complete the following steps:

rify that the data from the table below has been pasted to worksheet titled "Part 2".
le this spread sheet: Monopoly Profit Maximizing Analysis
certain to BOLD all titles and Axis used throughout assignment
culate the appropriate formula for each cell of the (5) blank columns
ach cell should show (2.00) decimal places value

truct the following Smooth Line Graphs:

graph that compares: Price/Unit Demand, Marginal Cost, Marginal Revenue, and Average Total Costs. Title this g
rmination. Be certain to appropriately label axis (14pt font)
d to graph(a): colored dashed lines indicating (1) most profitable price level, (2) profit maximizing output, (3) A
poly profitability" by typing the words Monopoly Profit
d to graph(a): arrows indicating Demand Price juncture, MC=MR, Average Total Costs. Connect these arrows to
graph that compares: TR with TC. Title this graph: Revenue - Cost Comparison. Be certain to appropriately
s. (14pt font)
n the completed spreadsheet data: high light (color) the entire row(s) showing the profit maximizing level (rang
ch graph should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be f
at, and Layout.
sert a (Text Box) and answer the following question:
Explain in your own words why MC=MR is a profit maximizing production level for the Monopoly
Explain how the monopolist determines where to price his product
A monopoly is considered an inefficient use of resources for what two reasons?

2 Data
Price Per
Unit
(Demand
)
8.00
7.80
7.60
7.40
7.20
7.00
6.80

Total
Total
Costs
Revenue
(TC)
(TR)
10.00
14.00
17.50
20.75
23.80
26.70
29.50

Total
Profit
(TP)

Average
Total
Marginal Marginal
Costs
Cost
Revenue
(ATC)
(MC)
(MR)

6.60
6.40
6.20
6.00
5.80
5.60

32.25
35.10
38.30
42.70
48.70
57.70

Title this graph: Monopoly Profit

utput, (3) ATC level. Also indicate the "area of

e arrows to side-bar labels for each.

ropriately label axis as well as TR and TC

level (range) of production

st will be found under the tab: Chart Tools,

Microeconomics Course Assignment

Part 1 Perfect Competition Analysis

Student: Shaun Dean

: Costs of Production and Profit Maximization Analysis for th

stsMarket
of Production and Profit
Analysis for the P
Total Maximization
Average

Total
Output/hr
-

1
2
3
4
5
6
7
8
9
10
11

Price Per
Unit
5
5
5
5
5
###
5
5
5
5
5
5

Total Fixed
Cost (TFC)
$
$
$
$
$
$
$
$
$
$
$
$

10
10
10
10
10
10
10
10
10
10
10
10

Variable
Cost (TVC)
7
10
12
13
15
18
22
27
33
40
48

Total Cost
(TC)

$
$
$
$
$
$
$
$
$
$
$
$

10
17
20
22
23
25
28
32
37
43
50
58

Fixed Cost
(AFC)
10
5
3
3
2
2
1
1
1
1
1

Maximum Profit at Profit Maximiz

Output

Average Cost of Productions

18
16
14
12
10

Cost

8
6
4
2
-

Quantity

6
4
2
-

Quantity

Total Cost of Production

$70
$60
$50
$40

Cost

$30
$20
$10
$-

10

11

Quantity

Profit Maximization
$70
$60
$50
$40

Revenue and Cost

$30
$20
$10
$-

Quantity

Measuring Total Profits

18.00
16.00
14.00
12.00
10.00

Profits

Measuring Total Profits

18.00
16.00
14.00
12.00
10.00

Profits

8.00
6.00
4.00
2.00
-

Quantity

10

11

on Analysis for the Perfect Competitive Market Structure

AnalysisAverage
for the Perfect
Structure Marginal
Average Competitive Market
Total
Variable
Cost (AVC)
7
5
4
3
3
3
3
3
4
4
4

Total Cost
(ATC)
17.00
10.00
7.33
5.75
5.00
4.67
4.57
4.63
4.78
5.00
5.27

Marginal
Cost (MC)
-

7
3
2
1
2
3
4
5
6
7
8

Revenue
(TR)
$
$
5
$
10
$
15
$
20
$
25
$
30
$
35
$
40
$
45
$
50
$
55

Total Profit
(TP)
$
$
$
$
$
$
$
$
$
$
$
$

(10)
(12)
(10)
(7)
(3)
2
3
3
2
(3)

Revenue
(MR)
$
$
5
$
5
$
5
$
5
$
5
$
5
$
5
$
5
$
5
$
5
$
5

rofit at Profit Maximizing

Output

Average Fixed Cost

(AFC)
Average Variable Cost
(AVC)

uctions

Average Total Cost (ATC)

1. The most efficent way to operate is when marginal

marginal cost.

2. If the price when down to 4.25 they would be opera

3. No

10

11

10

11

ion

Total Cost (TC)

Total Variable Cost (TVC)
Total Fixed Cost (TFC)

10

11

on

10

11
Total Revenue
(TR)

fits

Average Total Cost (ATC)

Marginal Cost (MC)

fits

Average Total Cost (ATC)

Marginal Cost (MC)
Marginal Revenue (MR)

10

11

to operate is when marginal profit equals 0 and the only way to get to that point is when your marginal revenu

n to 4.25 they would be operating at a loss and the minimal loss would be at 7 hours of output.

en your marginal revenue equals your

output.

Microeconomics Course Assignment

Part 1 Perfect Competition Analysis

Student: Shaun Dean

Monopoly Profit Maximizing Analysis

Total Output Price Per Unit
Units
(Demand)
-

Total Costs
(TC)

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

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

Total
Revenue (TR)

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

7.80
15.20
22.20
28.80
35.00
40.80
46.20
51.20
55.80
60.00
63.80
67.20

Monopoly Profit Determination

16.00
14.00
12.00
10.00
8.00
Cost and Revenue
6.00

Monopoly Profit

4.00
2.00
-

10

11

Quantity

Revenue - Cost Comparison

80.00
70.00
60.00

12

Revenue - Cost Comparison

80.00
70.00
60.00
50.00

Cost and Revenue

40.00
30.00
20.00
10.00
-

Quantity

10

11

y Profit Maximizing Analysis

Total Profit
(TP)
(10.00)
(6.20)
(2.30)
1.45
5.00
8.30
11.30
13.95
16.10
17.50
17.30
15.10
9.50

Average Total Marginal Cost

Marginal
Costs (ATC)
(MC)
Revenue (MR)
14.00
8.75
6.92
5.95
5.34
4.92
4.61
4.39
4.26
4.27
4.43
4.81

4.00
3.50
3.25
3.05
2.90
2.80
2.75
2.85
3.20
4.40
6.00
9.00

7.80
7.40
7.00
6.60
6.20
5.80
5.40
5.00
4.60
4.20
3.80
3.40

1. In the case of this part

the Marginal Revenue is
equal. If you go one mor
profit in comparison to 9

2. A Monopolist determin
on a demand curve to de
3. A Monopolist charges

ofit Determination

Price Per Unit (Demand)

Average Total Costs (ATC)
Marginal Cost (MC)
Marginal Revenue (MR)

MC=MR

10

11

st Comparison

12

Average Total Cost

st Comparison

Total Revenue (TR)

Total Costs (TC)

ty

10

11

12

In the case of this particular monopoly you would want be making your best profit at 9 units
e Marginal Revenue is still above the Marginal Cost although it is close and not perfectly
ual. If you go one more unit it would be below marginal cost and you would start losing
ofit in comparison to 9 units.

A Monopolist determines where to price its product when MR=MC and will plot the quantity
a demand curve to decide what market price corresponds to what quantity.

A Monopolist charges a price that is too high, and it produces an output that is too low.

age Total Cost

Microeconomics

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

Totel Fixed
Cost(TFC)
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

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

Totel Cost(TC)
$10
$17
$20
$22
$23
$25
$28
$32
$37
$43
$50
$58

Average Costs of Product

Cost

18
16
14
12
10
8
6
4
2
0
1

Quantity

Total Costs of Productio

$70
$60
$50
$40
Cost

$30
$20
$10

$60
$50
$40
Cost

$30
$20
$10
$0
1

Quantity

Profit Maximization
$70
$60
$50
$40
Revenue and Cost
$30
$20
$10
$0
1

Quantity
Profits

Measuring Total Profi

18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
1

7
Quantity

10

sts of Production and Profit Maximization Analysis for the Perfec

Average Fixed
Cost(AFC)

Average Variable Cost(AVC)

Average Totel Cost(ATC)

10
5
3
3
2
2
1
1
1
1
1

7
5
4
3
3
3
3
3
4
4
4

17.00
10.00
7.33
5.75
5.00
4.67
4.57
4.63
4.78
5.00
5.27

sts of Production

Average Fixed Cost(AFC)

Average Variable Cost(AVC)
Average Totel Cost(ATC)
Marginal Cost(MC)

10

11

ts of Production

Totel Fixed Cost(TFC)

Tote Variable Costl(TVC)
Totel Cost(TC)

Totel Fixed Cost(TFC)

Tote Variable Costl(TVC)
Totel Cost(TC)

10

11

12

Maximization

Totel Cost(TC)
Total Revenue

10

11

12

g Total Profits

Average Totel Cost(ATC)

Marginal Cost(MC)
Marginal Revenue (MR)

10

11

12

13

Student: Insert name here

or the Perfect Competitive Market Structure

Marginal Cost(MC)
7
3
2
1
2
3
4
5
6
7
8

Market Price Perfect

Competition
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5

Total Revenue
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55

1. Explain in your own words why MC=MR is a profit maximizing productio

2. Assume prices dropped to $4.25. What then would be the profit maxim
3. Should the firm continue to operate at this point?

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

Marginal Revenue (MR)

$5
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5

mizing production level ?

e profit maximizing or loss minimizing level of production ?

MC=MR

ction ?

Monopoly Profit Maximizing Analysis

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

Price Per
Unit
Total
(Demand Revenue
)
(TR)
$8.00
0.00
$7.80
7.80
$7.60
15.20
$7.40
22.20
$7.20
28.80
$7.00
35.00
$6.80
40.80
$6.60
46.20
$6.40
51.20
$6.20
55.80
$6.00
60.00
$5.80
63.80
$5.60
67.20

Total
Costs
(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

Total
Profit
(TP)

Average
Total
Marginal Marginal
Costs
Cost
Revenue
(ATC)
(MC)
(MR)

-6.20
-2.30
1.45
5.00
8.30
11.30
13.95
16.10
17.50
17.30
15.10
9.50

14.00
8.75
6.92
5.95
5.34
4.92
4.61
4.39
4.26
4.27
4.43
4.81

4.00
3.50
3.25
3.05
2.90
2.80
2.75
2.85
3.20
4.40
6.00
9.00

7.80
7.40
7.00
6.60
6.20
5.80
5.40
5.00
4.60
4.20
3.80
3.40

Monopoly Profit Determination

$16.00
$14.00
$12.00

Cost and Revenue

$10.00

Price Per Unit (Deman

$8.00

Average Total Costs (A

Marginal Cost (MC)

$6.00
Monopoly
Profit

Marginal Revenue (MR

$4.00
$2.00
$0.00
1

9 10 11 12 13

Quantity

Revenue - Cost Comparison

80.00

Revenue - Cost Comparison

80.00
70.00
60.00
50.00
Cost and Revenu

Total Revenue (

40.00

Total Costs (TC

30.00
20.00
10.00
0.00
1

Quantity

10

11

12

13

1. Explain in your own words why MC=MR is a profit maximizing production level
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

Price Per Unit (Demand)

Average Total Costs (ATC)
Marginal Cost (MC)

MC=MR

Marginal Revenue (MR)

Average Total Costs

Total Revenue (TR)

Total Costs (TC)

izing production level for the

s product?

for what two reasons?