| I. Perfect Competition |
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| a. Fill in the table for the perfectly competitive firm. Explain how you arrived at each number |
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| b. What is the optimal output, price and profit of the firm? |
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| c. Is the firm in long or only short-run equilibrium? Explain. |
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| Perfectly Competitive Firm |
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Perfect Competition
Market |
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total |
total |
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| quantity |
marginal |
variable |
fixed |
total |
marginal |
total |
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Quantity |
Quantity |
| supplied |
cost |
cost |
cost |
cost |
revenue |
revenue |
profit |
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Price |
Demand |
Supplied |
| 10 |
$5 |
$71 |
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$5 |
16,000 |
10,000 |
| 11 |
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$77 |
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$6 |
15,000 |
11,000 |
| 12 |
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$84 |
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$7 |
14,000 |
12,000 |
| 13 |
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$92 |
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$8 |
13,000 |
13,000 |
| 14 |
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$101 |
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$9 |
12,000 |
14,000 |
| 15 |
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$111 |
$12 |
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$10 |
11,000 |
15,000 |
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| II. Monopoly |
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a. Fill in the table for the monopoly firm.
Explain how you arrived at each number |
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| b. What is the optimal output, price and profit of the firm? |
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c. Compare and explain the monopoly differences
in price, quantity and profit to the PC model in I above. |
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| Monopoly Firm |
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Monopoly Market |
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total |
total |
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| quantity |
marginal |
variable |
fixed |
total |
marginal |
total |
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Quantity |
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| supplied |
cost |
cost |
cost |
cost |
revenue |
revenue |
profit |
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Price |
Demand |
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| 7,000 |
$5 |
$71,000 |
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$8 |
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$14 |
7,000 |
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| 8,000 |
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$77,000 |
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$13 |
8,000 |
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| 9,000 |
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$84,000 |
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$12 |
9,000 |
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| 10,000 |
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$92,000 |
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$11 |
10,000 |
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| 11,000 |
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$101,000 |
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$10 |
11,000 |
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| 12,000 |
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$111,000 |
$12,000 |
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$9 |
12,000 |
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III. Assume that the the market in the problems above is instead imperfectly competitive - let's say monopolistic competition. Please demonstrate your understanding of this market structure by listing an example price and quantity that a firm within the industry would set. Explain your answer. (Hint: Perfect competition and monopoly are boundaries for which imperfect competition exists between.)