Reference no: EM13374402

Assume that the cost data in  the top table of the next column are for a purely competitive producer (LO3).

Total Product	Average          Fixed Cost	Average Variable Cost	Average Total Cost	Marginal Cost
0
1	$60.00	$45.00	$105.00	$45.00
2	30.00	42.50	72.50	40.00
3	20.00	40.00	60.00	35.00
4	15.00	37.50	52.50	30.00
5	12.00	37.00	49.00	35.00
6	10.00	37.50	47.50	40.00
7	8.57	38.57	47.14	45.00
8	7.50	40.63	48.13	55.00
9	6.67	43.33	50.00	65.00
10	6.00	46.50	52.50	75.00

1. At a product price of $56, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output?  What economic profit or loss will the firm realize per unit of output?
2. Answer the questions of 4a assuming product price is $41.
3. Answer the questions of 4a assuming product price is $32.
4. In the table below, complete the  short-run supply schedule for the firm (column 1 and 2) and  indicate the  profit  or  loss incurred at each output (column 3).

(1) Price	(2) Qty Supplied, Single Form	(3) Profit (+) or Loss (-)	(4) Qty Supplied I500 Firms
$26
32
38
41
46
56
66

1. Now, assume that there are I500 identical firms in  this competitive industry, that  is, there are I500 firms, each of which has the cost data shown in the  table. Complete the industry supply schedule (column 4).
2. Suppose the market demand data for the  product are as follows:

Price	Total Qty Demanded
$26	17,000
32	15,000
38	13,500
41	12,000
46	10,500
56	9500
66	8000

What will be the equilibrium price? What will be the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run?