Question 1. Consider the following table of numbers, which represents demand and cost conditions for a competitive firm. (a) Fill in the missing values. (b) What level of output should the firm produce? Explain.
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P = MR
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Q
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TFC
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AFC
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TVC
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AVC
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TC
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ATC
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MC
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TR
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Total
Profit
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600
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0
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-
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0
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-
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570
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-
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600
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1
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570
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240
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600
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2
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430
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600
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3
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670
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600
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4
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960
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600
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5
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1350
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600
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6
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1840
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600
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7
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2430
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600
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8
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3120
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600
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9
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3910
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600
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10
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4800
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Question 2. You own four firms that produce different products. The following table summarizes the conditions in each firm. After calculating the missing numbers for each firm, make one of the following four decisions regarding operations in each firm, and explain why a particular decision is reached.
(a) continue producing the same output level
(b) shut down
(c) increase output
(d) decrease output
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Firm
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P
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MR
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TR
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Q
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TC
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MC
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ATC
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AVC
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A
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11
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8
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20
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200
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5
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9
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B
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3
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1
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100
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1.5
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2.5
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2
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C
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4
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2
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200
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2
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7
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5
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D
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8
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5
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10
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70
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5
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6
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Question 3. Given the market share information in the table below, calculate the four firm concentration ratio and the Herfindahl index.
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Firm
Number
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Market Share
(%)
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1
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35
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2
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25
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3
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15
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4
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15
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5
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10
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