Problem 1) Fill in the missing values in the following table:
|
Quantity
|
Fixed cost
|
Variable Cost
|
Total Cost
|
Total Average Cost
|
Marginal Cost
|
|
|
|
|
|
|
|
|
0
|
$55
|
$0
|
$55
|
$0
|
|
|
|
|
|
|
|
|
|
1
|
$55
|
$30
|
$85
|
$55
|
|
|
|
|
|
|
|
|
|
2
|
$55
|
$55
|
$110
|
$27.50
|
|
|
|
|
|
|
|
|
|
3
|
$55
|
$75
|
$130
|
$18.33
|
|
|
|
|
|
|
|
|
|
4
|
$55
|
$105
|
$160
|
$13.75
|
|
|
|
|
|
|
|
|
|
5
|
$55
|
$155
|
$210
|
$11
|
|
|
|
|
|
|
|
|
|
6
|
$55
|
$225
|
$280
|
$9.16
|
|
|
|
|
|
|
|
|
|
7
|
$55
|
$315
|
$370
|
$7.86
|
|
Given a price of $40, at what level of production will this company maximize profits? Why?
Problem 2) Why do marginal and average cost curves take a “U” shape?
Problem 3) Define “Monopoly”. Is it true that a monopolist will maximize profit where Marginal Revenue equals the Average Cost of Production? Why or why not?
Problem 4) Real wages (wages without inflation) have continued to increase over the long run. Please explain how this can occur.
(This is a real think about it question, not directly in the book)