Microeconomics Course Assignment

In fulfillment of Course ePortfolio and CSIS requirement

This Assignment is required and totals 50 points

Part 1 Perfect Competition Analysis

Using the spread sheet data below complete the following steps:

1. Copy and paste the spread sheet data below to (Sheet 2)

2. Title this spread sheet: Costs of Production and Profit Maximization Analysis for the Perfect Competitive Market Structure
3. Place boarders around each cell in the spread sheet.
4. Expand the column titles for each of the 8 columns (ie) (TFC) = Total Fixed Costs (TFC). Make certain the titles are stacked and center
5. Be certain to BOLD all titles used throughout assignment
6. Calculate the appropriate fomula 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 certain to appropriately label axis (10p
b) A graph that compares: TC, TVC, TFC. Title this graph: Total Costs of Production. Be certain to appropriately label axis (10pt font)
c) A graph that compares: TR with TC. Title this graph: Profit Maximization. Using the data spreadsheet determine what level of produc
most profitable. Insert a colored, vertical line that indicates this Profit Maximizing point. Shadow the line. Be certain to appropriately label a
d) A graph that compares: ATC, MC, and MR. Title this graph: Measuring Total Profits. Insert a colored, shadowed, vertical line indicatin
of production total profits are the greatest. Align this graph (d) under graph (c) at the appropriate profit maximizing production level.
Be certain to appropriately label the axis (10pt font)
e) On the completed spreadsheet data: high light (color) the entire row showing the proift maxizing level of production
f) On (e) above: Insert (arrowhead lines) indicating where MC = MR. Connect these arrows to a side-bar label: Marginal Costs = Margi
g) On (e) above: Insert (arrowhead lines) indicating where Maximum Profit at profit maximizing output. Connect these arrows to a side-b
Maximum Profit at Profit Maximizing Output.
h) Each grpah should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be found under the tab: C
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 level of production ?
3. Should the firm continue to operate at this point?

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 level of production ?
3. Should the firm continue to operate at this point?

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

(TFC)
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

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

(TC)

(AFC)

(AVC)

(ATC)

(MC)

Market
Price
Perfect
Competiti
Total
on
Revenue
$5

Total
Profit

Part 2 Monopoly Profitability Analysis

Using the spread sheet data below complete the following steps:
1. Copy and paste the spread sheet data below to (Sheet 3)
2. Title this spread sheet: Monopoly Profit Maximizing Analysis
5. Be certain to BOLD all titles and Axis used throughout assignment
6. Calculate the appropriate fomula for each cell of the (5) blank columns
-Each cell should show (2.00) decimal places value

Construct the following Smooth Line Graphs:

a) A graph that compares: Price/Unit Demand, Marginal Cost, Marginal Revenue, and Average Total Costs. Title this graph: Monopoly Pr
Determination. Be certain to appropriately label axis (14pt font)
b) Add to graph(a): colored dashed lines indicating (1) most profitable price level, (2) profit maximizing output, (3) ATC level. Also indicat
monopoly profitablility" by typing the words Monopoly Profit
c) Add to graph(a): arrows indicating Demand Price juncture, MC=MR, Average Total Costs. Connect these arrows to side-bar labels for ea
d) A graph that compares: TR with TC. Title this graph: Revenue - Cost Comparison. Be certain to appropriately label axis as well as T
curves. (14pt font)
e) On the completed spreadsheet data: high light (color) the entire row(s) showing the proift maxizing level (range) of production
f) Each grpah should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be found under the tab: C
Format, and Layout.
g) Insert a (Text Box) and answer the following question:
1. Explain in your own words why MC=MR is a profit maximizing production level for the 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?

Microeconomics Course Assignment

In fulfillment of Course ePortfolio and CSIS requirement

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

Price Per
Unit
(Demand)
$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

(TR)

(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

(TP)

(ATC)

(MC)

(MR)

arket Structure

acked and centered.

ely label axis (10pt font)

xis (10pt font)
at level of production is the
propriately label axis (10pt font)
ical line indicating at what level
uction level.

l Costs = Marginal Revenue.

arrows to a side-bar label:

d under the tab: Chart Tools,

(MR)

h: Monopoly Profit

evel. Also indicate the "area of

e-bar labels for each.

l axis as well as TR and TC

roduction
d under the tab: Chart Tools,

Costs of Production and Profit Maximization Analysis for the Perfect Competitive

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

Total
Fixed
costs
(TFC)
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

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

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

Average Average Average

Fixed
Variable
Total
Costs
Costs
Costs
(AFC)
(AVC)
(ATC)
0
0
0
10
7
17.00
5
5
10.00
3
4
7.33
3
3
5.75
2
3
5.00
2
3
4.67
1
3
4.57
1
3
4.63
1
4
4.78
1
4
5.00
1
4
5.27

Profit Maximaization

Total Revenue
Total Costs (TC)

Total Revenue
Total Costs (TC)

Measuring Total Profits

Average Total Costs

(ATC)
Marginal Costs (MC)
Marginal Revenue
(MR)

ePortfolio and CIS Requirement

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

Monopoly Profit Maximizing Analysis

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)
-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
Costs
(ATC)
-14.00
8.75
6.92
5.95
5.34
4.92
4.61
4.39
4.26
4.27
4.43
4.81

Monopoly Profit Determination

Monopoly Profit
MR

Revenue-Cost Comparison

Perfect Competitive Market Structure

Market
Price
Marginal Perfect
Costs Competit
Total
(MC)
ion
Revenue
$5
$0
$5
7
$5
$5
3
$10
$5
2
$15
$5
1
$20
$5
2
$25
$5
3
$30
$5
4
$35
$5
5
$40
6
$5
$45
7
$5
$50
$5
8
$55

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

Marginal
Revanue
(MR)

Marginal Costs= Marginal Reven

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

Maximum Profit at Profit Maximiz

Total Costs of Production

Total Fixed
Costs (TFC)
Total Variable
Costs (TVF)
Total Costs
(TC)

Revenue
Costs (TC)

1. Explain in your own words why MC=MR is a profit maximizing production lev
MC=MR is the maximum profit level becasue if the MC was higher he the company would
because it is costing more to make then what they are selling it for. If the MR can rises ab
overpriced and will no longer sell as well.
2. Assume prices dropped to $4.25. What then would be the profit maximizing o
level of production ?
The level of profit maximizing or minimizing would be at 7.
3. Should the firm continue to operate at this point?
If this was a long term or on going price drop, the company would suffer and take a loss.

because it is costing more to make then what they are selling it for. If the MR can rises ab
overpriced and will no longer sell as well.
2. Assume prices dropped to $4.25. What then would be the profit maximizing o
level of production ?
The level of profit maximizing or minimizing would be at 7.
3. Should the firm continue to operate at this point?
If this was a long term or on going price drop, the company would suffer and take a loss.

Revenue
Costs (TC)

age Total Costs

)

inal Costs (MC)

inal Revenue

mizing Analysis
Marginal Marginal
Cost
Revenue
(MC)
(MR)
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

rmination
Demand Price
MC = MR

MC
Price Per Unit (Demand)
Average Total Costs (ATC)
Marginal Cost (MC)
Marginal Revenue (MR)

MC
MR

omparison

TR
TC
Total Revenue (TR)
Total Costs (TC)

Average
Total Costs

Costs= Marginal Revenue

rofit at Profit Maximizing Output

zing production level ?

he the company would be losing money
If the MR can rises above this point, it is
profit maximizing or loss minimizing

uffer and take a loss.

If the MR can rises above this point, it is

profit maximizing or loss minimizing

uffer and take a loss.

ePortfolio and CIS Requirement

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

Monopoly Profit Maximizing Analysis

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)
-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
Costs
Cost
(ATC)
(MC)
-14.00
4.00
8.75
3.50
6.92
3.25
5.95
3.05
5.34
2.90
4.92
2.80
4.61
2.75
4.39
2.85
4.26
3.20
4.27
4.40
4.43
6.00
4.81
9.00

Monopoly Profit Determination

MC

Monopoly Profit

MC
MR

Revenue-Cost Comparison

TR
TC

Tot

Tot

nalysis
Marginal
Revenue
(MR)
7.80
7.40
7.00
6.60
6.20
5.80
5.40
5.00
4.60
4.20
3.80
3.40

tion
Demand Price
MC = MR
Price Per Unit (Demand)
Average Total Costs (ATC)
Marginal Cost (MC)

Average
Total Costs

Marginal Revenue (MR)

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

the Monopoly.
A monoplogy can set the bar for price, and other companies w
mooplies price. The monopolies MC=MR is they max thus it is
2. Explain how the monoploist determines where to pric
The price is set just above the MC=MR and this is where a mon
3. A monopoly is considered an inefficient use of resour
Becasue a monopoly can set their own prices, they can charge
them to be less resorsful becsue they dot hve the costant worr
losing costomers.

on

3. A monopoly is considered an inefficient use of resour

Becasue a monopoly can set their own prices, they can charge
them to be less resorsful becsue they dot hve the costant worr
losing costomers.

TR
TC

Total Revenue (TR)

Total Costs (TC)

C=MR is a profit maximizing production level for

nd other companies will base theriprices off of the

is they max thus it is max for other companies.
mines where to price his product.
nd this is where a monoploly can make their best profit.
fficient use of resources for what two reasons?
rices, they can charge whatver they want, this casues
t hve the costant worry of how to save money or worry of

fficient use of resources for what two reasons?

rices, they can charge whatver they want, this casues
t hve the costant worry of how to save money or worry of