Name: Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages Table 13-1
Number of Workers Total Output
0
0
1
2
3
4
5 Marginal Product
-30
45
60
50
40 1. Refer to Table 13-1. What is total output when 1 worker is hired? 2. Refer to Table 13-1. What is total output when 4 workers are hired? Table 13-2
Number of
Workers
0
1
2
3
4 Total
Output
0
300
500
600
650 Marginal
Product
-- 3. Refer to Table 13-2. What is the marginal product of the first worker? 4. Refer to Table 13-2. What is the marginal product of the third worker? 5. Refer to Table 13-2. At which number of workers does diminishing marginal product begin? Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages
Table 13-3
Number of
Workers
0
1
2
3
4 Output
0
90
170
230
240 Fixed
Cost
$50
$50
$50
$50
$50 Variable
Cost
$0
$20
$40
$60
$80 Total
Cost
$50
$70
$90
$110
$130 6. Refer to Table 13-3. The marginal product of the fourth worker is 7. Refer to Table 13-3. If the firm can sell its output for $1 per unit, what is the profit-maximizing level of output? Table 13-7
The Flying Elvis Copter Rides
Quantity Total
Cost Fixed
Cost Variable
Cost Marginal
Cost 0
1
2
3 $50
$150
G
M $50
A
H
N $0
B
I
O -C
$120
P Average
Fixed
Cost
-D
J
Q Average
Variable
Cost
-E
K
$120 Average
Total
Cost
-F
L
R 8. Refer to Table 13-7. What is the value of A? 9. Refer to Table 13-7. What is the value of B? 10. Refer to Table 13-7. What is the value of G? 11. Refer to Table 13-7. What is the value of J? 12. Refer to Table 13-7. What is the value of L? 13. Refer to Table 13-7. What is the value of M? 14. Refer to Table 13-7. What is the value of O? 15. Refer to Table 13-7. What is the value of P?
Page 2 of 8 Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages Table 13-8
Quantity
of Output
0
1
2
3
4
5
6 Fixed
Cost
$20
$20
$20
$20
$20
$20
$20 Variable
Cost
$0
$10
$40
$80
$130
$200
$300 16. Refer to Table 13-8. What is the average fixed cost of producing 5 units of output? 17. Refer to Table 13-8. What is the marginal cost of producing the fifth unit of output? Table 13-17
Consider the following table of long-run total cost for four different firms:
Quantity
Firm 1
Firm 2
Firm 3
Firm 4 1
$180
$120
$150
$210 2
$350
$250
$300
$340 3
$510
$390
$450
$490 4
$660
$540
$600
$660 5
$800
$700
$750
$850 6
$930
$870
$900
$1,060 7
$1,050
$1,050
$1,050
$1,290 18. Refer to Table 13-17. Which firm has constant returns to scale over the entire range of output? 19. Refer to Table 13-17. Which firm has economies of scale over the entire range of output? 20. Refer to Table 13-17. Which firm has diseconomies of scale over the entire range of output? Page 3 of 8 Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages
Table 14-7
Suppose that a firm in a competitive market faces the following revenues and costs:
Marginal
Marginal
Quantity
Cost
Revenue
12
$5
$7.50
13
$6
$7.50
14
$7
$7.50
15
$8
$7.50
16
$9
$7.50
17
$10
$7.50
21. Refer to Table 14-7. If the firm is currently producing 14 units, what would you advise the owners? Figure 14-2
Suppose a firm operating in a competitive market has the following cost curves: 22. Refer to Figure 14-2. If the market price is Pa, in the short run the firm will earn 23. Refer to Figure 14-2. If the market price is Pb, in the short run the firm will earn 24. Refer to Figure 14-2. If the market price is Pc, in the short run the firm will earn 25. Refer to Figure 14-2. If the market price is Pd, in the short run the firm will earn Page 4 of 8 Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages
Figure 14-5
Suppose a firm operating in a competitive market has the following cost curves: 26. Refer to Figure 14-5. When market price is P7, a profit-maximizing firm's short-run profits can be represented by the
area 27. Refer to Figure 14-5. In the short run, if the market price is higher than P1 but less than P4, individual firms in a
competitive industry will earn 28. Refer to Figure 14-5. Firms would be encouraged to enter this market for all prices that exceed 29. Refer to Figure 14-5. In the short run,if the market price is higher than P4 but less than P6, individual firms in a
competitive industry will earn Page 5 of 8 Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages Figure 14-13
Suppose a firm in a competitive industry has the following cost curves: 30. Refer to Figure 14-13. If the price is $6 in the short run, what will happen in the long run? 31. Refer to Figure 14-13. If the price is $4.50 in the short run, what will happen in the long run? Page 6 of 8 Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages Figure 15-5 32. Refer to Figure 15-5. A profit-maximizing monopoly will produce an output level of 33. Refer to Figure 15-5. A profit-maximizing monopoly will charge a price of 34. Refer to Figure 15-5. A profit-maximizing monopoly's total revenue is equal to 35. Refer to Figure 15-5. A profit-maximizing monopoly's total cost is equal to 36. Refer to Figure 15-5. A profit-maximizing monopoly's profit is equal to Page 7 of 8 Homework 3 - Costs of Production, Perfect Competition & Monopoly – 8 Pages Table 15-5
A monopolist faces the following demand curve:
Price
Quantity
$51
1
$47
2
$42
3
$36
4
$29
5
$21
6
$12
7
37. Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the
profit-maximizing level of production? 38. Refer to Table 15-5. The monopolist has total fixed costs of $60 and has a constant marginal cost of $15. What is the
profit-maximizing price? Page 8 of 8

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