PERFECT COMPETITION and THE SUPPLY CURVE & MONOPOLY, Microeconomics

Joe Brown’s dairy operates in a perfectly competitive marketplace. Joe’s machinery costs $500 per day and is the only fixed input. His variable costs are comprised of the wages paid to the few workers he employs at the dairy and the grain he feeds to his dairy cows.

The variable cost associated with each level of output is given in the accompanying table.

Gallons of Milk Variable Cost
0 -
1000 $ 2,100
2000 $ 2,200
3000 $ 2,900
4000 $ 3,680
5000 $ 5,180

a. Calculate the total cost, the average variable cost, the average total cost, and the marginal cost for each quantity of output.

Gallons of Milk FC VC TC MC AVC ATC
0 $500 - - - -
1000 500 $ 2,100 2600 2.10 26.00
2000 500 $ 2,200 2700 2.70 1.35 27.00
3000 500 $ 2,900 3400 1.70 1.13 11.30
4000 500 $ 3,680 4180 1.39 .92 10.45
5000 500 $ 5,180 5680 1.42 1.13 11.36

b. What is the break-even price?



c. What is the shut-down price?


d. Suppose that the price at which Joe can sell milk is $3 per gallon. In the short run, will Joe earn a profit?



e. In the short run, should he produce or shut down?



f. Now suppose that the price at which Joe can milk is $1.50 per gallon. In the short run, will Joe earn a profit?



g. In the short run, should he produce or shut down?




h. Finally, Suppose that the price at which Joe can sell milk is $0.50 per gallon. In the short run, will Joe earn a profit?



i. In the short run, should he produce or shut down?







Posted Date: 8/19/2012 3:25:45 PM | Location : United States







Related Discussions:- PERFECT COMPETITION and THE SUPPLY CURVE & MONOPOLY, Assignment Help, Ask Question on PERFECT COMPETITION and THE SUPPLY CURVE & MONOPOLY, Get Answer, Expert's Help, PERFECT COMPETITION and THE SUPPLY CURVE & MONOPOLY Discussions

Write discussion on PERFECT COMPETITION and THE SUPPLY CURVE & MONOPOLY
Your posts are moderated
Related Questions
explain stages and various coordination mechanism involved in policy process

#question.what is the periodc clasification?.

Industrial Policy: Government policies which are aimed at fostering the domestic development of particular desirable or productive industries, in order to enhance productivity, cre

what is externalities and market inefficiency

So what caused the end of Malthusian age? How did humanity escape from the trap in that invention and ingenuity increased the numbers though not the material well-being of humanity

The Wealth of Nations of Modern Economies When the federal government uses expenditures to stimulate the economy, it changes not only the present but the future as well. Question

In this assignment you will apply consumer choice theory and marginal analysis to business problems. Consider each of the following products and services: a pair of tickets to a s

An Exception: OECD Economies It isn't inevitable that there be such divergence. United States--with its 14 to 25-fold increase in output per worker over the years since 1870-ha

Given that TC=1000+10Q-0.9Q^2+0.04Q^3,,Find the rate of output Q that result in minimum Average variable cost

Question 1: i) Elaborate on how CPI is used to calculate inflation and what are the limitations of such a measure? ii) Growth is always beneficial. Discuss iii) Explain