Cost and Competitive Markets Worksheet Exercises
- Complete a table for Q, FC, VC, TC, MC, MR, Price, TR and Profit using reasonable numbers for a perfectly competitive firm. Forprice, use a number equal to the number of letters in your first and last name (maximum 20). For Q use 0, 1, 2, 3, 4, 5, 6, 7, 8 For MC use $2, 3, 5, 8, 11 15 20, 25.Then make up numbers for FC, VC, TC, MR but make certain that they correspond to the numbers you already used for Price and MC.
Then find and show the profit maximizing level of output showing that it is where MR = MC. (okay if your quantity is in between two numbers).
You may need to play around with the numbers to make this work out.
- What was the one most important concept you learned in the readings on costs of production and competitive markets? In a one page essay, summarize this concept, explain how it changed your prior understanding, and show that this concept is important by applying it to a real life situation. Please make certain that this essay is based on your own understanding, not the understanding of someone else you found on the internet.
- Based on your own experience, describe a business that is quite competitive. What good or service is producedWhich of the criteria for a perfectly competitive firm are met by this businessand which are not? (Identical products; price taker; low economic profits)
For this business give examples (description of the cost; no dollar amount needed) of the following and explain why they are examples of this type of cost
Explicit fixed cost
Explicit variable cost
Implicit fixed cost
Implicit variable cost
– Original work only please
