(0.5 points) What does the term “variable costs” mean?

CHAPTER 7

(0.5 points) What does the term “variable costs” mean? What is an example of a variable cost for an electronics manufacturer?

(0.5 points) What does the term “fixed costs” mean? What is an example of a fixed cost for an electronics manufacturer?

(1.75 points)

Using the information provided in the table below, fill in the rest of the table’s missing values.

Costs for a firm

Quantity Variable Cost Fixed Cost Total Cost Average Variable

Cost Average Total

Cost Marginal Cost

0 0 100 N/A N/A

1 30 100

2 50 100

3 60 100

4 200 100

5 400 100

Based on your answers in part A, now imagine a situation in which the firm produces a quantity of 3 units that it sells for a price of $90 each. What will be the amount of the company’s profits or losses?

Based on your answers in part A, now imagine a situation in which the firm produces a quantity of 3 units that it sells for a price of $90 each. Should the firm expand production to the 4th unit of quantity? Why or why not?

(0.5 points)

Graphically, describe where the marginal cost curve intersects the average total cost curve. (Note: I mean this in a general sense, not related to any previous numerical examples in this Assignment.)

Explain why you answered what you did for part A.

CHAPTER 8

(0.15 points) In perfect competition, are there few or many barriers to entry (choose one)?

(0.15 points) In perfect competition, are products from different sellers identical or differentiated (choose one)?

(0.15 points) In perfect competition, are there few or many firms competing with one another (choose one)?

(0.15 points) In perfect competition, are sellers price takers or price makers (choose one)?

(0.65 points)

Using the information provided in the table below, fill in the rest of the table’s missing values.

Firm profits per unit sold

Quantity (Q)

Total Cost (TC)

Total Revenue (TR)

Profit

0 60 0

1 100 80

2 125 160

3 140 240

4 170 320

5 230 400

6 350 480

7 590 560

At what level of quantity does this firm maximize profit? And what is the amount of profit at that level of quantity?

(0.5 points) Suppose a perfectly competitive firm faces marginal revenue of $102.

What dollar value of marginal cost should the firm try to achieve?

Why should the firm try to achieve the level of marginal cost you chose for part A?

(0.25 points) Can a firm operating at a price and quantity lower than its break even point stay in business in the short run? Why or why not?

(0.25 points) What can we say about the accounting profit of a perfectly competitive firm that is able to produce at a point where marginal revenue is higher than average cost?

(0.25 points) Suppose a perfectly competitive market has a demand change, causing firms to suddenly make economic losses (in other words, negative economic profits).

Will firms begin to enter or exit that market (choose one)?

As a result of the entry or exit from part A, what will happen to the market supply curve for this perfectly competitive market?