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Additional Problem 3 Answers: Pure Competition 1. Suppose Jolly Pony, a rocking-chair manufacturing company, is a perfectly competitive firm in an industry in which there are 1,000 identical firms. Jolly Pony's total cost is related to output per day as follows: Quantity Total Cost TFC TVC ATC AVC MC 0 \$ 500 \$500 1 1,000 500 \$ 500 \$1,000 \$500 \$500 2 1,300 500 800 650 400 300 3 1,500 500 1,000 500 333 200 4 1,800 500 1,300 450 325 300 5 2,200 500 1,700 440 340 400 6 2,700 500 2,200 450 367 500 7 3,300 500 2,800 471 400 600 8 4,000 500 3,500 500 438 700 a) Add columns to the above table for total fixed cost, total variable cost, average total cost, average variable cost and marginal cost at each level of output in the space provided. b) Plot the average total cost, average variable cost, and marginal cost curves for Jolly Pony in the space provided below. What is Jolly Pony's supply curve? Indicate it in the graph you have drawn. Graph on next page.

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