2. The table below illustrates the quantity of output (in units) and total cost (TC, in MYR) for a perfectly competitive firm that can sell its output at MYR 9 per unit.

a. Calculate the total variable cost (TVC), average total cost (ATC), average variable cost (AVC), marginal cost (MC), total revenue (TR), marginal revenue (MR) and profit or loss at every levels of quantity. Fill in the blank entries. Show your calculations.

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b. Determine the profit maximizing level of output and the amount of economic profit the firm is making at current price of MYR 9.

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c. Determine whether the firm will produce or not in the short run, given the following price levels. Calculate the amount of profit or loss at each level.

1. At a market product price of MYR 3.

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2. At a market product price of MYR 16.

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[Total: 15 marks]

The market for wheat consists of 500 identical firms, each with the total and marginal cost functions shown:

TC = 90,000 + 0.00001Q2

MC = 0.00002Q,

where Q is measured in bushels per year. The market demand curve for wheat is Q = 90,000,000 - 20,000,000P, where Q is again measured in bushels and P is the price per bushel.

a. Determine the short-run equilibrium price and quantity of each firm.

b. Calculate the firm's short-run profit (loss) at that quantity.

c. Assume that the short-run profit or loss is representative of the current long-run prospects in this market. You may further assume that there are no barriers to entry or exit in the market. Describe the expected long-run response to the conditions described in part b. (The TC function for the firm may be regarded as an economic cost function that captures all implicit and explicit costs.)

The total cost concept is the most convenient method for determining a product's selling price if a company includes all manufacturing, selling, and administrative costs associated with the product in its reported cost. A markup is then added to achieve the firm's desired profit.

For example, assume that the following costs are incurred to make 10,000 units of a product:

• Variable manufacturing costs $5 per unit
• Variable selling and administrative costs $2 per unit
• Fixed factory overhead costs $80,000
• Fixed selling and administrative expenses $30,000

Instructions

1. Calculate the total cost to make 10,000 units and the cost to make one unit?
2. Next, this company wishes to price the product so that a profit of $27,000 will be made if all 10,000 units are sold?
3. Calculate the selling price of the product if it is marked up 15 percent above the total cost.

A firm's total cost of producing Q units of output is C (Q) = 79 + 20Q. The inverse demand curve for the firm's product is P(Q) = 100-Q, where P denotes the price of the product.

a) If the price of the product is set equal to the firm's marginal cost, what profit will the firm earn?

b) If the firm charges a two-part tariff (a fixed fee plus a per unit price), how large is the fixed fee? How large is the deadweight loss?

Based on the table below, what was the profit of the firm?

A firm's total cost of producing Q units of output is C (Q) = 200 + 50Q. The inverse demand curve for the firm's product is P(Q) = 80-Q, where P denotes the price of the product.


a) If the price of the product is set equal to the firm's average, how much will the firm produce? (5 points) Hint: choose the larger of the two numbers. Show your work.


b) If the firm is under marginal cost pricing, how many units will the firm produce? Show your work. (5 points)

A monopolist faces a single market with the following demand curve and total cost

P = 180 – 2.5Q and TC = 2Q2

i. Determine the quantity of output that it should produce and the price it should charge to maximize profit. Then, calculate the profit.

In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of $4.5 million.

1. What are the fixed costs of hamburger production? (Enter your answer in millions rounded to 1 decimal place.)
2. What are the variable costs when the firm produces 2 million hamburgers? (Enter your answer in millions.)
3. What is the average cost per burger when the firm produces 1 million hamburgers? (Round your answer to 2 decimal places.)
4. What is the average cost when the firm produces 2 million hamburgers?

when a firm faces a market price that is between the minimums of average total cost and average variable cost, which of the strategies should it choose?

a. continue to produce and sell output because it will maximize its economic profit

b. produce nothing and shut down the business

c. produce nothing and keep the business

d. continue to produce and sell output because it will minimize its economic loss