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 centered. 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
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)
Total Profit
(MR)
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
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)
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Costs of Production and Profit Maximization Analysis for the Perfect Competitiv Total Output/hr 0 1 2 3 4 5 6 7 8 9 10 11 Total Cost (TC) $10 $17 $20 $22 $23 $25 $28 $32 $37 $43 $50 $58
1. E 2. A 3. S
Profit Maximization
$70 $60 Cost, Revenue $50 $40 $30 $20 $10 $0 1 2 3 4 5 6 7 8 9 10 11 12 Output Total Cost (TC) Total Revenue
sis for the Perfect Competitive Market Structure Marginal Cost (MC) 0 7 3 2 1 2 3 4 5 6 7 8 Market Price Perfect Competition $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 Total Revenue $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55 Marginal Revenue (MR) 0 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5 $5
Total Profit
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 produ 3. Should the firm continue to operate at this point?
1.MC=MR is a profit maximizing production level because it occurs where total profit is greatest at the lowest possible overall costs. Beyond this point of costs and revenue, output begins to cost more than the entity is capable of bringing in as revenue. Which would create an unstable growthof production without its couterbalance or revenue.
2. If prices were to drop to $4.25, the loss minimizing level of production would be reached with a smaller output per hour, at 6 and 7 units. This level would be reached more quickly than that of $5 as the price. 3. The firm is accruing a substantial amount of costs, and profit is very low. After passing 11 units per hour of production, profits fall below $0. The firm should cease to operate at this point.
urs where total profit t of costs and revenue, in as revenue. Which rbalance or revenue.
Price Per Unit (Demand) Average Total Cost (ATC) Marginal Cost (MC) Marginal Revenue (MR)
Total Costs, To
(TC)
1. Explain in your own words why MC=MR is a profit maximizing production level for the Monopoly 2. Explain how the monopolist determines where to price his product 3. A monopoly is considered an inefficient use of resources for what two reasons? 1. When Marginal Costs equal Marginal Revenue, an entity or monopoly is not exceeding its revenue with costs, and can therefor remain in operation. Resources are being used efficiently, managed correctly, and can support success long term.
2. Price should equal the demand and supply of the market, where demand is high but supply is not so low that the market doesn't collapse itself. Place price too low and there will be surplus units. 3. Monopolies are considered to be inefficient because they often do not set their prices at Mc=MR. Profit maxumization and the utilization of being a single seller make monopolies quick to set prices above market equilibrium, and withhold or overuse resources.
sis Marginal Cost (MC) 4.00 3.50 3.25 3.05 2.90 2.80 2.75 2.85 3.20 4.40 6.00 9.00 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
often do not set their eing a single seller make d withhold or overuse