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
Molecular Energies,  Translational, rational and vibration components of the energy of the molecules of a gas can be recognized. A molecule is a collection of atoms held in a pa

The State of Confidence in Conventional Judgements : While individuals fall back on conventions to guide their behaviour in the face of uncertainty, they are also aware that th


Q. Explain Labour Intensity? Labour Intensity: Ratio of labour effort expended, compared to total on-the-job compensated labour time. A higher ratio of labour intensity reflect

Aggregate Supply When referred to in the circumstance of GNP or GDP, aggregate supply refers to the labor and capital needs to proceeds the level of products and services need

Topic: Please choose a case study in water related area and analyse it from at least two angles (or more) by examining the technical side as well as the economical, social and poli

1. Define the concept of opportunity cost in your own words. Given an example from your own life of the opportunity cost of a decision (do NOT use classroom examples).  Explain why

explain the properties of indifference curve with the help of diagrams?

what is mrs

1. Suppose that Mr. John has the following Cobb-Douglas utility function U = 6X^2/3y^1/3 the market price of X and Y commodity are $1 and $2, respe