Microeconomics

Mayfair Office Chairs, Inc. is a small firm in the office furniture industry. They have asked you to help them complete the limited data they have gathered in an effort to enable effective decision-making. Some work can be done using MS Excel but it must be copied to an MS Word file for the final submission of this assignment. To assist Mayfair Office Chairs, Inc., respond to the following:

• Using MS Excel or a table in MS Word, complete Table-1 (Mayfair Office Fairs, Inc., Cost and Revenue Data).
  • Assume that the price is $165.
  • Assume the fixed costs are $125, at an output level of 1.
  • Assume that the data represents a firm in pure competition.
  • Show your calculations.
• Explain the MC=MR Rule.  Describe the market structures to which this rule applies.
• Create a chart to illustrate the data in Columns 9 and 10.
• Describe the profit maximizing (or loss minimizing) output for this firm.  Explain why or why not there an accounting profit?
• Explain why a firm in pure competition is considered to be a “price taker.”

(Assignment continues below Table-1.)

Table-1:  Mayfair Office Chairs, Inc., Cost and Revenue Data

• Using the data in Table-1 (Mayfair Office Chairs, Inc., Cost and Revenue Data),
  • complete Table-2 (Mayfair Office Fairs, Inc., Revenue/Profit/Loss Data).
• Show your calculations in summary form.
• Using the completed data in Table-2 (Mayfair Office Chairs, Inc., Revenue/Profit/Loss Data),
  • identify the break even output level for this firm.

Table-2: Mayfair Office Chairs, Inc., Revenue/Profit/Loss Data              

• Submit your analysis in Microsoft Word format