Solve for letters A, B, and C. Q TFC AFC TVC AVC TC ATC MC 0 1000 X 0 X   X X 20 1000   70         40 1000   110 B       60 1000   140         80 1000   160     A   100 1000   200         120 1000 C 240           Formulas:  MU = change in TU / change in Q MPP of Labor = change in Q / change in L TC = TFC + TVC        or        TC = ATC x Q MC = change in TC / change in Q AFC = TFC/Q AVC = TVC/Q ATC = TC/Q      or     ATC = AFC + AVC TR = P x Q (that’s Price x Quantity) MR = change in TR / change in Q Profit / Loss = TR – TC TVC = AVC x Q

  Assume this firm is trying to maximize Profit under Perfect Competition.  How much is its Profit or Loss?  Show your solution.   Formulas:  MU = change in TU / change in Q MPP of Labor = change in Q / change in L TC = TFC + TVC        or        TC = ATC x Q MC = change in TC / change in Q AFC = TFC/Q AVC = TVC/Q ATC = TC/Q      or     ATC = AFC + AVC TR = P x Q (that’s Price x Quantity) MR = change in TR / change in Q Profit / Loss = TR – TC TVC = AVC x Q  

What is the Profit Maximization Rule in Perfect Competition?

Refer to the 2 previous questions.  If you were the owner of the firm, would you continue to produce at an output of 29, or would you stop production altogether?  Whatever your answer is, explain why.

Answer questions A and B: a. If you are China, what is good about you devaluing your own currency? b. If you are China, what is bad about you devaluing your own currency? 

Perfect Competition: in order to maximize Profit, the firm’s Selling Price and Quantity produced is at MR = MC. In a Monopoly (see graph below, which is a Monopoly), how does the firm know what Price to charge and what Quantity should be produced, in order to maximize Profit?  Explain the process.

Assume there are 2 factors (labor and capital) in a company.  Their MPP to price ratios look like this:   MPP (Labor) is 35                MPP (Capital) is 80 ————————-   

Give an example of the Income Effect (tell me a story).

Solve for MFC at A, B, and C. Use this formula:  MFC = change in TC / change in Quantity of Factor X Qty of Factor X Price of Factor X Total Cost Marginal Factor Cost (in $) 0 $4 $0 N/A 2 $4 $8 A 4 $4 $16 B 6 $4 $24 C

Why is the Market Supply of Labor curve upward sloping?  This question is related to the 2 previous questions.