ECON 1900 : Perfect competition practice graphs.doc
Get access
Related Documents
Related Questions
Complete the following table: Assume TFC=$60
Q | TVC | TC | AFC | AVC | ATC | MC |
0 | 0 | 60+0=60 | XX | XXX | XXX | XX |
1 | 30 | 60+30=90 | 60/1=60 | 30/1=30 | 90/1=90 | (90-60)/(1-0)=30 |
2 | 49 | 60+49=109 | 60/2=30 | 49/2=24.5 | 109/2=54.5 | (109-90)/(2-1)=19 |
3 | 65 | |||||
4 | 80 | |||||
5 | 100 | |||||
6 | 124 | |||||
7 | 150 | |||||
8 | 180 | |||||
9 | 215 | |||||
10 | 255 | |||||
11 | 300 | |||||
12 | 360 |
Answer the observation based on the table:
OBSERVATION
(1) At Q=0, TFC = _________.
(2) As Q rises, TFC remains ________________.
(3) At Q = 0, TVC = ___________.
(4) As Q rises, TVC _________.
(5) At Q = 0, TC = __________.
(6) Increases in TC are brought about by increases in ___________.
(7) As Q rises, AFC ___________.
(8) AVC is minimum at Q = ____________.
(9) ATC is minimum at Q = _____________.
(10) When AVC is at its minimum, MC __________ AVC.
(11) When ATC is at its minimum, MC ___________ ATC.
Answer the following questions pertaining to the graph.
1. What is the shape of the AVC and ATC curves? What economic law accounts for this shape? How do you know this?
2. What is the shape of the MC curve? Why does it have this shape? How do you know this?
3. What do you know about the values of AVC and ATC at the points where MC crosses them?
4. Is the AVC higher than the ATC or lower than it? How do you know this?
5. Is the costs in the short run or the long run? How do you know this?
6. Assume the company above is in a Perfect Competition Industry: If the price of the product is $20 that is sold at, what will be the profits and how many will be sold at that price? Can the company raise the price?
7. Again in a Perfect Competition Industry: What would the profit situation be at a price of $30, how much to sell at that price?
8. With the Perfect Competition industry: What would the profit situation be at a price of $10, how much to sell at that price?
9. What are the characteristics of a perfect competition company and industry?
Following is the complete table -
Q |
FC |
VC (TC-FC) |
TC |
AFC (FC/Q) |
AVC (VC/Q) |
ATC (TC/Q) |
MC (TCn-TCn-1) |
0 |
10 |
0 |
10 |
- |
- |
- |
- |
1 |
10 |
10 |
20 |
10 |
10 |
20 |
10 |
2 |
10 |
18 |
28 |
5 |
9 |
14 |
8 |
3 |
10 |
23 |
33 |
3.33 |
7.67 |
11 |
5 |
4 |
10 |
33 |
43 |
2.5 |
8.25 |
10.75 |
10 |
5 |
10 |
48 |
58 |
2 |
9.6 |
11.6 |
15 |
6 |
10 |
68 |
78 |
1.67 |
11.33 |
13 |
20 |
7 |
10 |
98 |
108 |
1.43 |
14 |
15.42 |
30 |
8 |
10 |
148 |
158 |
1.25 |
18.5 |
19.75 |
40 |
Q | TTC | TFC | TVC | ATC | AFC | AVC | MC |
0 | 125 | Ā | Ā | Ā | Ā | Ā | Ā |
10 | Ā | Ā | Ā | Ā | Ā | Ā |
5 |
20 | Ā | Ā | Ā | 10.50 | Ā | Ā | Ā |
30 | Ā | Ā | 110 | Ā | Ā | Ā | Ā |
40 | 255 | Ā | Ā | Ā | Ā | Ā | Ā |
50 | Ā | Ā | Ā | Ā | Ā | 3 | Ā |
60 | Ā | Ā | Ā | Ā | Ā | Ā | 3 |
70 | Ā | Ā | Ā | 5 | Ā | Ā | Ā |
80 | Ā | Ā | 295 | Ā | Ā | Ā | Ā |
I have to answer questions 4 and 5 exercises from chapter 8. It is a table and I have to fill in the numbers that are missing. It looks like this