For a perfectly competitive seller price equals A marginal

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A perfectly competitive firm finds that the market price for its product is $30.00. It has a fixed cost of $100.00 and a variable cost of $17.50 per unit for the first 50 units and then $37.50 per unit for all successive units.

Instructions: Round your answers to 2 decimal places.

a. Does price equal or exceed average variable cost for the first 50 units?  (Click to select) No Yes  .

   What is the average variable cost for the first 50 units? $  .


b. Does price equal or exceed average variable cost for the first 100 units?  (Click to select) No Yes  .

   What is the average variable cost for the first 100 units? $  .


c. What is the marginal cost per unit for the first 50 units? $   per unit.

  What is the marginal cost for units 51 and higher? $   per unit.


d. For each of the first 50 units, does MR exceed MC?  (Click to select) No Yes  .

  What about for units 51 and higher?  (Click to select) No Yes  .


e. What output level will yield the largest possible profit for this perfectly competitive firm?  units.

A perfectly competitive firm finds that the market price for its product is $20.00. It has a fixed cost of $100.00 and a variable cost of $10.00 per unit for the first 50 units and then $25.00 per unit for all successive units.

Instructions: Round your answers to 2 decimal places.

a. Does price equal or exceed average variable cost for the first 50 units?  (Click to select) No Yes  .

   What is the average variable cost for the first 50 units? $  .


b. Does price equal or exceed average variable cost for the first 100 units?  (Click to select) Yes No  .

   What is the average variable cost for the first 100 units? $  .


c. What is the marginal cost per unit for the first 50 units? $   per unit.

  What is the marginal cost for units 51 and higher? $   per unit.


d. For each of the first 50 units, does MR exceed MC?  (Click to select) No Yes  .

  What about for units 51 and higher?  (Click to select) No Yes  .


e. What output level will yield the largest possible profit for this perfectly competitive firm?  units.

A perfectly competitive wheat farmer can sell any wheat they grow for $30 per bushel. Their five hectares of land show diminishing returns because some are better suited for wheat production than others. The first hectare can produce 1000 bushels of wheat, the second hectare 900, the third 800, and so on. Fill in the table given below to answer the following questions. How many bushels will each of the farmer’s five hectares produce? How much revenue will each hectare generate? What are the TR and MR for each hectare?

If the marginal cost of planting and harvesting a hectare is $27,000 per hectare for each of the five hectares, how many hectares should the farmer plant and harvest?

 hectares

A perfectly competitive wheat farmer can sell any wheat they grow for $20 per bushel. Their five hectares of land show diminishing returns because some are better suited for wheat production than others. The first hectare can produce 1000 bushels of wheat, the second hectare 900, the third 800, and so on. Fill in the table given below to answer the following questions. How many bushels will each of the farmer’s five hectares produce? How much revenue will each hectare generate? What are the TR and MR for each hectare?

If the marginal cost of planting and harvesting a hectare is $18,000 per hectare for each of the five hectares, how many hectares should the farmer plant and harvest?

 

Suppose you have been tasked with regulating a single monopoly firm that sells 50-kilogram bags of concrete. The firm has fixed costs of $30 million per year and a variable cost of $4 per bag no matter how many bags are produced.

Instructions: Enter your answers as whole numbers. In part e, round your answer to 2 decimal places.

a. If this firm kept on increasing its output level, would ATC per bag ever increase?   (Click to select) Yes No  .

     Is this a decreasing-cost industry?   (Click to select) Yes No  .

b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? $  per bag.

     At that price, what would be the size of the firm's profit or loss?

     At that price, the firm's  (Click to select) profit loss  equals $   million.

     Would the firm want to exit the industry?   (Click to select) Yes No  .

c. You find out that if you set the price at $5 per bag, consumers will demand 30 million bags. 

     How big will the firm’s profit or loss be at that price? $  .

d. If consumers instead demanded 40 million bags at a price of $5 per bag, how big would the firm's profit or loss be?

     At that price, the firm's  (Click to select) profit loss  equals $  million.

e. Suppose that demand is perfectly inelastic at 40 million bags, so that consumers demand 40 million bags no matter what the price is. 

     What price should you charge if you want the firm to earn only a fair rate of return? Assume as always that TC includes a normal profit.$  per bag.