04 Jun Question ECON 102 Homework 5 _________________________________________________________
Question
ECON 102
Homework 5
_______________________________________________________________________
Read these instructions carefully!
· Carefully answer each of the questions below.
· You can write or type your answers for the questions EXCEPT ANY GRAPHS MUST BE COMPLETED BY HAND (NOT USING THE DRAWING TOOLS IN WORD OR ANY OTHER PROGRAM).
· Please put your name and PSU ID number at the top of the 1st page.
· You may use as many sheets of paper as you need.
· When you are finished, scan your entire document (including the parts you typed and the parts done by hand).
· Save the file on your computer (.PDF format preferred) and then upload it to the ANGEL drop box for this homework assignment.
________________________________________________________________________
1. (42 total points) Suppose that a monopolistically competitive firm must build a production facility in order to produce a product. The fixed cost of this facility is FC = $24. Also, the firm has constant marginal cost, MC = $3. Demand for the product that the firm produces is given by P = 27-3Q.
a) (27 points) Fill in the table below. If any of your values have decimals, you may round to only one numeral after the decimal (nearest 10th of a dollar).
Quantity of Output
Price
Total Cost
Average Total Cost
Total Revenue
Profits
1
24
27
27
24
-3
2
21
30
15
42
12
3
18
33
11
54
21
4
15
36
9
60
24
5
12
39
7.8
60
21
6
9
42
7
54
12
7
6
45
6.4
42
-3
8
3
48
6
24
-24
9
0
51
5.4
0
-54
b) (10 points) How much output will this firm produce if it maximizes profit?
The firm will produce 4 units.
c) (5 points) What price should this firm charge if it wants to maximize profit?
The firm will charge $15
2. (12 points) Carefully explain what will happen as we move from the short run to a long run equilibrium in a monopolistically competitive industry if firms are making a positive profit in the short run. Your explanation should clearly state what will happen to the demand curve facing an individual firm and the reason why this happens.
A positive profit will attract other firms into the industry. New firms will offer substitutes and by doing so they will lower the demand for the product of the initial firm which had been earning profit. Such actions will persist until profits are eliminated and the demand curve for the initial firm is tangent to the ATC curve.
3. (34 total points) Suppose that two players are playing the following game. Player A can choose either Top or Bottom, and Player B can choose either Left or Right. The payoffs are given in the following table, where the number on the left is the payoff to Player A, and the number on the right is the payoff to Player B:
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.