Assignment:
1) The table below provides data for a competitive product. Workers are paid $24 per day, materials cost $1 per unit, fixed costs are $2 per day and the going market price is $9 per unit.
fill in the blanks in the table below, and find the profit-maximizing level of output.
find the level of profit.
|
Workers
|
Output
(or Q)
|
Labor
Cost
|
Material
Cost
|
FixedCost
|
Total
Cost
|
Marginal
Cost
|
Marginal Revenue (P)
|
|
10
|
5
|
$240
|
$5
|
$2
|
|
|
$9
|
|
11
|
29
|
264
|
|
$2
|
|
|
$9
|
|
12
|
41
|
|
|
$2
|
|
|
$9
|
|
13
|
47
|
|
|
$2
|
|
|
$9
|
|
14
|
50
|
|
|
$2
|
|
|
$9
|
|
15
|
52
|
|
|
$2
|
|
|
$9
|
2) For question (2), answer two of the options below:
a) If a competitive firm is making a short-run loss, would it be better to produce nothing at all or to continue operating at a loss? Elucidate.
b) Compare the outcomes of a competitive firm and a monopolist (i.e., price, output, profit potential and any social costs).
c) You recently noted that a national beverage company generously assisted in renovations of the basketball arena and library at a large state university, and university officials agreed to an exclusive beverage contract with the company. Was this most likely a benevolent charitable act by the beverage company? Elucidate.
d) Suppose that you own a golf course that is part of a Florida resort. You primarily serve two groups of people: local residents and tourists. Devise a price discrimination strategy that will increase your revenues compared to a single-pricing strategy.