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h4f08 - Copy - a perfectly competitive market Q FC VC TC MC...

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ECO 304K INTRO MICRO FALL 2008 Hickenbottom HOMEWORK #4 (Due October 22) 1. Explain whether each of the following statements is always true, never true, or sometimes true. If sometimes true, be sure your explanation contains the conditions under which the statement is true, and which it is false. (2 points each) a) In short run competitive equilibrium, the firm must be producing at a point where there are constant returns to scale in production. b) As output increases, AVC approaches ATC. 2. Answer the following based on the table below which is the cost of one firm in
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Unformatted text preview: a perfectly competitive market. Q FC VC TC MC AVC AFC ATC 150 NA NA NA NA 1 15 2 14 3 40 4 202 5 43 6 14 7 95 8 263 9 21 10 15.9 a) Fill in the missing items in the following table. I would suggest completing the table, cut it out, and paste it (either electronically or physically) into your sheet you turn in. (2 points) b) Find the firm’s output and profit if the market price is 19. (1 point) c) Explain why the price must be greater than 25 for the firm to produce in the long run and greater than 12 to produce in the short run. (2 points)...
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