Suppose that fixed cost is $120. In the table below, total variable cost is given for one unit, two units, etc. Fill in the rest of the table.
| Output | Total Variable Cost | Total Cost | Average Total Cost | Average Variable Cost | Marginal Cost |
|---|---|---|---|---|---|
| 1 | $100 | ||||
| 2 | $180 | ||||
| 3 | $250 | ||||
| 4 | $340 | ||||
| 5 | $450 | ||||
| 6 | $570 | ||||
| 7 | $690 | ||||
| 8 | $820 | ||||
| 9 | $950 |
Sketch the average total cost, average variable cost, and marginal cost curves
If the price for a unit of output were $125, how much would the company produce?
Suppose that the market price were $80. In the short run, what would be the equilibrium quantity of output for this firm? In the long run, what would be the equilibrium quantity?
If the industry were in long-run equilibrium and everyone had the same cost structure, how much would the company produce? What would be the equilibrium price?
The following table shows number of workers and total number of lawns that they can mow. Fill in the rest of the table.
| Workers | Output | Average Product | Marginal Product |
|---|---|---|---|
| 1 | 7 | ||
| 2 | 15 | ||
| 3 | 23 | ||
| 4 | 30 | ||
| 5 | 36 |
For what range of output is there increasing returns? Constant returns? Diminishing returns?
If the price of a lawn mowed were $20, what would be the marginal revenue product of labor when there are 2 workers?
Comment on monopolistic competition. Will the socially optimal level of output be produced? Will a typical firm earn economic rent (excess profits)?