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Tutorial+7+Solutions - Eco1010f Tut assignment 7 Due date...

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Unformatted text preview: Eco1010f Tut assignment 7 Due date: week beginning 6 th April 2010 The following table was drawn for a perfectly competitive firm. Complete the table, then Quantity Price Total Revenue Total Cost Total Profit Average cost Marginal cost Marginal revenue Marginal profit 5--- 1 5 5 4 1 4 4 5 1 2 5 10 7 3 3.5 3 5 2 3 5 15 9 6 3 2 5 3 4 5 20 13 7 3.25 4 5 1 5 5 25 19 6 3.8 5 5 6 5 30 26 4 4.33 7 5-2 7 5 35 35 5 9 5-4 A) Sketch two sets of graph axes one above the other. Quantity goes on the horizontal axis for both. On the top diagram plot TR, TC and Total profit against the quantity, and on the lower one plot AC, MC and MR against quantity. What is the profit maximising output? B) How much is the maximum total profit? C) How much is the average profit at that point? D) What is the breakeven output; i.e., the output at which the firm makes normal profits only? Answer the following MCQs and be prepared to discuss them in your tut. 1.) In the long run: 1. at least one factor of production is fixed in supply 2. the elasticity of supply is greater than it is in the short run * 3. we are looking at the effects of changing the technology we use 4. we are concerned with the law of Diminishing Marginal Returns4....
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This note was uploaded on 02/28/2012 for the course ECO 1010F taught by Professor Catherinekannemeyer during the Spring '11 term at University of Cape Town.

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Tutorial+7+Solutions - Eco1010f Tut assignment 7 Due date...

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