ECON 120-005 – Principles of Microeconomics

ECON 120-005/095: Principles of MicroeconomicsFall 2016D2L Homework #7 1. Fill in the blanks. a) If the market price is $160 (P?1? = $160), then the producer’s SR profit maximizingoutput level Q?1?* is ________________ units of output. At Q?1?*:b) Total revenue is ________________, which is represented by the area ________________;c) Total variable cost is ________________, which is represented by the area ________________;d) Total fixed cost is ________________, which is represented by the area ________________;e) Total cost is ________________, which is represented by the area ________________; and,f) SR profit is ________________, which is represented by the area ________________.2. Fill in the blanks. a) If the market price is $70 (P?2? = $70) then the producer’s SR profit maximizing outputlevel Q?2?* is ________________ units of output. At Q?2?*:b) Total revenue is ________________, which is represented by the area ________________;c) Total variable cost is ________________, which is represented by the area ________________;d) Total fixed cost is ________________, which is represented by the area ________________;e) Total cost is ________________, which is represented by the area ________________; and,f) SR profit is ________________, which is represented by the area ________________.3. Fill in the blanks. a) If the market price is $22 (P?3? = $22), then the producer’s SR profit maximizing (orloss minimizing) output level Q?3?* is ________________ units of output. At Q?3?*: b) Total revenue is________________; c) Total variable cost is ________________; d) Total fixed cost is________________; e) Total cost is ________________; and, f) SR profit is ________________. 4. The table below gives cost data for ACME, Inc., a perfectly competitive, profit-maximizing widget firm.Fill in the blanks and highlight the appropriate mathematical symbol in the brackets [ < | = | > ]. Q (# widgets) TVC TC MC AFC AVC ATC 50 $7,833 $20,433 90 252.00 156.67 408.67 60 $8,640 $21,240 72 210.00 144.00 354.00 70 $9,287 $21,887 58 180.00 132.67 312.67 80 $9,813 $22,413 48 157.50 122.67 280.17 90 $10,260 $22,860 42 140.00 114.00 254.00 100 $10,667 $23,267 40 126.00 106.67 232.67 110 $11,073 $23,673 42 114.55 100.67 215.21 120 $11,520 $24,120 48 105.00 96.00 201.00 130 $12,047 $24,647 58 96.92 92.67 189.59 140 $12,693 $25,293 72 90.00 90.67 180.67 150 $13,500 $26,100 90 84.00 90.00 174.00 160 $14,507 $27,107 112 78.75 90.67 169.42 170 $15,753 $28,353 138 74.12 92.67 166.78 180 $17,280 $29,880 168 70.00 96.00 166.00 190 $19,127 $31,727 202 66.32 100.67 166.98 200 $21,333 $33,933 240 63.00 106.67 169.67 210 $23,940 $36,540 282 60.00 114.00 174.00 220 $26,987 $39,587 328 57.27 122.67 179.94 230 $30,513 $43,113 378 54.78 132.67 187.45 240 $34,560 $47,160 432 52.50 144.00 196.50 250 $39,167 $51,767 490 50.40 156.67 207.07 260 $44,373 $56,973 552 48.46 170.67 219.13 270 $50,220 $62,820 618 46.67 186.00 232.67 280 $56,747 $69,347 688 45.00 202.67 247.67 290 $63,993 $76,593 762 43.45 220.67 264.11 300 $72,000 $84,600 840 42.00 240.00 282.00 a) If P?mkt?1? = $140 and ACME produces 150 widgets, where AVC is at a minimum, then ACME [ is | is not ]maximizing its profits because MR(150) = _________ [ < | = | > ] _________ = MC(150). ACME’s profits at150 widgets are ?(150) = _________________.b) If P?mkt?1? = $140 and ACME produces 180 widgets, where ATC is at a minimum, then ACME [ is | is not ]maximizing its profits because MR(180) = _________ [ < | = | > ] _________ = MC(180). ACME’s profits at180 widgets are ?(180) = _________________. c) If P?mkt?1? = $140, then ACME’s profit maximizing output level, Q?1?*, is _________ units becauseMR(Q?1?*) = _________ [ < | ? | > ] _________ = MC(Q?1?*). Given P?mkt?1? = $140 and Q?1?*, ACME’s profits atQ?1?* are ?(Q?1?*) = _________________.d) Suppose the market price ?increases ?to ?P?mkt?2? = $330?. If ACME continues to produce 170 widgets, then it [ is |is not ] maximizing its profits because MR(170) = _________ [ < | = | > ] _________ = MC(170). ACME’sprofits at 170 units are ?(170) = _________________.e) If P?mkt?2? = $330, then ACME’s profit maximizing output level, Q?2?*, is _________ widgets becauseMR(Q?2?*) = _________ [ < | ? | > ] _________ = MC(Q?2?*). Given P?mkt?2? = $330 and Q?2?*, ACME’s profits atQ?2?* are ?(Q?2?*) = _________________.f) Suppose the market price ?decreases to ?P?mkt?3? = $80?. If P?mkt?3? = $80, then ACME’s profit maximizing (or lossminimizing) output level, Q?3?*, is ______________________________ widgets because (explain briefly)____________________________________________________________________________________ and?(Q?3?*) = ___________________.