Reference no: EM131245170

Microeconomics

Assignment: LASA: The Costs of Production

Joseph Farms, Inc. is a small firm in the agricultural industry. They have asked you to help them complete the limited data they have gathered in an effort to enable effective decision-making. Some work can be done using MS Excel but it must be copied to an MS Word file for the final submission of this assignment. To assist Joseph Farms, Inc., respond to the following:

• Using MS Excel or a table in MS Word, complete Table-1 (Joseph Farms, Inc., Cost and Revenue Data).

o Assume that the price is $165.
o Assume the fixed costs are $125, at an output level of 1.
o Assume that the data represents a firm in pure competition.
o Show your calculations.

• Explain the MC=MR Rule. Describe the market structures to which this rule applies.

• Create a chart to illustrate the data in Columns 9 and 10.

• Describe the profit maximizing (or loss minimizing) output for this firm. Explain why or why not there is an economic profit?

• Explain why a firm in pure competition is considered to be a "price taker."

Table-1: Joseph Farms, Inc., Cost and Revenue Data

Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7		Column 8	Column 9	Column 10	Column 11
Output Level	Price per unit	Total Fixed Cost	Total Variable Cost	Total Cost	Average Fixed Cost	Average Variable Cost		Average Total Cost	Marginal Cost	Marginal Revenue	Total Revenue
0			$ -		NA
1			$ 113.00
2			$ 213.00
3			$ 300.00
4			$ 375.00
5			$ 463.00
6			$ 563.00
7			$ 675.00
8			$ 813.00
9			$ 975.00
10			$ 1,163.00

• Using the data in Table-1 (Joseph Farms, Inc., Cost and Revenue Data), complete Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data). Show your calculations in summary form.

• Using the completed data in Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data), Identify the break even output level for this firm.

Table-2: Joseph Farms, Inc., Revenue/Profit/Loss Data

Output Level	Price	Total Revenue	Total Costs from Table 1	Profit or Loss
0
1
2
3
4
5
6
7
8
9
10