A seller produces output with a constant marginal cost MC = 24. Suppose there is one group of consumers with the demand curve P1 = 80 − 2Q1, and another with the demand curve P2 = 60 − 3Q2.

(a) If the seller can discriminate between the two markets, what prices would she charge to each group of consumers?

(b) If the seller cannot discriminate, but instead must charge a uniform price to consumers in both markets, what will be her profit-maximizing price?

(c) Which, if any, consumer group benefits from price discrimination?

(d) If instead P1 = 60 − 2Q1, does either group benefit from price discrimination?

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]

Consider the following cost information for a firm that operates in a perfectly competitive market. Labor is a variable input.

OUTCOME #1: Suppose that the market price is $20. State the condition for the optimal quantity of output.   Using the condition, find the quantity of output that the firm should produce in the short run.   

OUTCOME #2: In the short run, should the firm produce the optimal quantity of output derived in previous question, or shut down immediately?   Give a detailed reason for your answer.

( Please help me, I really appreciate it!! )

A firm is producing and selling some output at an average variable cost of $8 per unit and bringing in a total revenue of $400. If the firm is currently indifferent between shutting down and continuing to operate in the short run and has a total fixed cost of $600, what is the firms average total cost?

Assume that price equals a rising marginal cost at 50 units of output. At this output, total variable cost is $250 and total fixed cost is $300. The product’s price is $6.

a. The perfectly competitive firm will maximize profit by producing ______ units of output.

b. If this firm shuts down, it will lose ______ dollars.

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.)

A laptop manufacturer can produce laptops at a cost of $400 per unit and incurs a fixed cost of $100,000 which is independent of the quantity produced. Currently the selling price of a laptop is $1400 and the resulting demand (or quantity sold, since both are the same) is 220,000 units. It is also known that a $2 decrease in price will increase the demand by 200 units. Assume the demand function is linear and fully known.

A. What is the maximum (highest) profit?

B. Assuming there is no fixed cost is (so fixed cost is $0 instead of $100,000), how high can the variable cost (which is $400 per unit currently) go so that the laptop manufacturer at least breaks even (or equivalently makes a non-negative maximum profit)?

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.