ECO100Y5 Lecture Notes - Lecture 8: Perfect Competition, Marginal Product, Marginal Cost

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ECO100Y5 Lecture Notes - Lecture 7: Exponential Discounting

ECO100Y5 Lecture Notes - Lecture 8: Perfect Competition, Marginal Product, Marginal Cost

ECO100Y5 Lecture 9: eco100 nov2

Document Summary

Chapter: 12 and 13: total production and marginal product. 18. 8: as you hire more employees, it increases first and then decreases, (cid:1859)(cid:1866) (cid:1868)(cid:1867)(cid:1856)(cid:1873)(cid:1855)(cid:1872)= We can see in the above graph that initially, adding more workers increases marginal product. This can be seen as the mirror image of the marginal product curve. Average fixed curve trends downward, average variable cost and average total cost is u-shaped: marginal cost curve. The marginal cost curve us u-shaped and as mc falls, the marginal product increases. Mc = ( tc / l) / ( q / l) It however, does not refer to a certain number, of days, months or years; it varies from firm to firm. In the long run, firms might be able to lower costs further. This is the graph for the kind of demand that has a perfectly competitive firm face for its product; it is perfectly elastic.

Related Questions

The following table shows the demand curve and cost information for a firm that is monopoly

Price	Quantity	TC
$10	0	$500
$9	200	$1,000
$8	400	$1,600
$7	600	$2,500
$6	800	$4,000

What quantity should they produce to maximize their profits?

200 units

400 units

800 units

600 units

Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information.

Assume that Mary can only choose from the quantities of output given in the table. By how will the quantity that she produces change after the new firms enter the market?

Original Demand Curve

Price	quantity	TC
30	0	$130
25	10	$140
20	20	$260
15	30	$450
10	40	$660

New Demand Curve

25	0	$130
20	10	$140
15	20	$260
10	30	$450
5	40	$660

Decrease by 5

Decrease by 10

Increase by 10

Increase by 5

Monopolistic competitor has the following information about cost and demand

Quantity	Price($)	Total Revenue ($)	Marginal Revenue ($)	Total Cost ($)	Marginal Cost ($)	Average Cost ($)
0	25	0	25	30	----	----
2	24	48	23	35	2.5	17.5
4	23	92	21	45	5	11.25
6	22	132	19	60	7.5	10
8	21	168	17	77	8.5	9.63
10	20	200	15	100	11.5	10
12	19	228	13	126	13	10.5
14	18	252	11	165	19.5	11.79
16	17	272	9	210	22.5	13.13
18	16	288	7	260	25	14.44
20	15	300	5	320	30	16

If this industry was perfectly competitive, what price would the good sell for?

$19

$23

$21

$15

Monopolistic competitor has the following information about cost and demand

Quantity	Price($)	Total Revenue ($)	Marginal Revenue ($)	Total Cost ($)	Marginal Cost ($)	Average Cost ($)
0	25	0	25	30	----	----
2	24	48	23	35	2.5	17.5
4	23	92	21	45	5	11.25
6	22	132	19	60	7.5	10
8	21	168	17	77	8.5	9.63
10	20	200	15	100	11.5	10
12	19	228	13	126	13	10.5
14	18	252	11	165	19.5	11.79
16	17	272	9	210	22.5	13.13
18	16	288	7	260	25	14.44
20	15	300	5	320	30	16

What will the firm

ceriseminnow141

Gulp and Devour
Output	TR	TC	Profit	AC	Price	MR	MC	Marginal
								Profit
1	135	100	35	100	135	135	100	35
2	260	200	60	100	130	125	100	25
3	375	300	75	100	125	115	100	5
4	480	400	80	100	120	105	100	5
5	575	500	75	100	115	95	100	-5
6	660	600	60	100	110	85	100	-15
7	735	700	35	100	105	75	100	-25
8	800	800	0	100	100	65	100	-35

Shady Enterprise
Output	TR	TC	Profit	AC	Price	MR	MC	Marginal
								Profit
1	160	50	110	50	160	160	50	110
2	300	125	175	62.5	150	140	75	65
3	420	220	195	75	140	120	100	20
4	520	350	170	87.5	130	100	125	-25
5	600	500	100	100	120	80	150	-70
6	660	675	-15	112.5	110	60	175	-115
7	700	875	-175	125	100	40	200	-160
8	720	100	-380	137.5	90	20	225	-205

What is the profit-maximizing output for each case? Show that three criteria are equivalent: marginal cost equals marginal revenue, maximum profit, and marginal profit equals zero.

copperkoala891

This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.

Quantity	Price	Marginal Cost	Average Total Cost
0	$50	--	--
1	$45	$30	$40
2	$40	$24	$32
3	$35	$14	$26
4	$30	$10	$22
5	$25	$12	$20
6	$20	$32	$22
7	$15	$50	$26
8	$10	$74	$32
9	$5	$104	$40
10	$0	$140	$50

Refer to Table 16-4. How much profit will this firm earn when it chooses its output to maximize profit?

	a.	an $8 profit
	b.	a $12 loss
	c.	a $25 profit
	d.	a $32 profit

burgundyguinea-pig124

ECO100Y5 Lecture Notes - Lecture 8: Perfect Competition, Marginal Product, Marginal Cost

ECO100Y5 Lecture Notes - Lecture 7: Exponential Discounting

ECO100Y5 Lecture Notes - Lecture 8: Perfect Competition, Marginal Product, Marginal Cost

ECO100Y5 Lecture 9: eco100 nov2

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