Homework 4

Homework 4 - level. Explain briefly. [2 points] c) At a...

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Spring 2009 Name: ___________________ ECON 203: Principles of Microeconomics TA: ______________________ Homework 4 (10 points) Due in the second midterm April 8 th -April 9 th , 2009 1) Assume that a purely competitive firm has the following schedule of costs. Output TFC TVC TC TR MC MR Profit 0 300 0 300 1 300 100 400 2 300 150 450 3 300 210 510 4 300 290 590 5 300 400 700 6 300 540 840 7 300 720 1040 8 300 950 1250 a) Complete the table at each level of output the firm might produce. Assume the market price is $200. [2 points] b) State the two methods that you may employ to find the profit-maximizing output
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Unformatted text preview: level. Explain briefly. [2 points] c) At a price of $200, how much would the firm produce? Verify that the two methods stated in part (b) give you the same answer. [2 points] 2) Why should a firm continue to produce when the market price is less than the firms average total cost but greater than its average variable cost. [2 points] 3) Explain why the long-run profit for firms in a purely competitive industry is zero. [2 points]...
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Homework 4 - level. Explain briefly. [2 points] c) At a...

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