Question

B. Short-Run Cost of Production Schedule - Product X (Perfect Competition) (A) Assume price = $250; Calculate total profit/loss using TR - TC method. (B) Calculate Output using the formula: Profit = (Price - ATC) XQ Hint: construct a new table to find new output at the different levels of ATC values (in first table) and profit in table 2 when price is $250. (C) Calculate Output using the formula: Profit = (Price - ATC) XQ Hint: construct a new table to find new output at the different levels of ATC values (in first table) when price is $180. Also, find new profit/loss values first. (D) Calculate Output using the formula: Profit (Price - ATC) xQ Hint: construct a new table to find new output at the different levels of ATC values (in first table) when price is $140. Also, find new profit/loss values first. (E) Use price schedule to determine Q's. (Repeat the process for prices $350, $450, $550, and $650 before presenting all the output computed at different price levels in the table below. (F) What does short-run cost model tell you about the behavior of the firm in regard to MC and Price?

Answer 1

We are supposed to do only one question. For solution to other questions please post as separate question.

ATC Output TFC TVC AFC Ave IC MC 21 1 22 o 200 175 3vo 375 soo 175 125 Soo 700 200 200 o- d m Juscort looo 1400 1900 300 yoo 200 175 375 100 iso 250 66.67 266.67 23334 50 200 250 40 240 280 33.33 283.33 1316.66 28.57/328.57/357.14 1200 200 soo 25 600 23o0 constant in in output. 1) As output increases Te increases, but the TFC remains and does not changes increase output 2) & AFC decreases with increase & AVC fara fiest naso decreases then. increases with increase in output lie i follows to U-pattern then increases. * ATC also first decreases Yes, there is a difference in AFC becaun. TIC is constant and does not charges with output therefore ARC on decreases with increase in output. 3) Me first decreases then increases with increase in output. Relationship is that all the there MC, AC and AVL have are u-shaped. & Also till McK AL and Al is falling and when Similarly for Auc. METAL, AC is rising