# EC101P39c - EC 2001 Problem Set No 3 Please note that this...

This preview shows pages 1–3. Sign up to view the full content.

EC 2001 Problem Set No. 3 Please note that this problem set will be helpful with questions requiring practice with “pencil and paper”, but there is of course additional material, requiring verbal and graphic analysis, with which you should be familiar but which is not included in the problem set. (1) The table below represents the cost structure facing a single-product, purely competitive, profit- maximizing firm. Fill in all the blanks. Assume only “whole” units can be produced, e.g., 5 units but not 5.4 units. (a) If the market price is \$113, what is the profit-maximizing output (Q * )? (b) Calculate the total profit at Q * as well as at Q * + 1 and Q * − 1. (c) If the market price of this product falls to \$63, how many units will they produce in the short run? The long run? Explain. (d) If the market price drops to \$51, how many units will they produce in the short run? In the long run? Explain. Q TFC TVC TC AFC AVC ATC MC 0 --- --- --- --- 1 110 2 230 3 180 4 300 5 16 50 6 70 7 61.4 8 620 9 670 10 910 11 92.7 12 110

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
(2) Globe Air is committed to flying the Des Moines-Sarasota route three times weekly regardless of economic conditions at least for the next year. Usually 90% of the seats are occupied. On
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern