I. Perfect Competitiona. Fill in the table for the perfectly competitive firm. Explain how you...

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I. Perfect Competitiona. Fill in the table for the perfectly competitive firm. Explain how you arrived at each numberb. What is the optimal output, price and profit of the firm? c. Is the firm in long or only short-run equilibrium? Explain.Perfectly Competitive FirmPerfect Competition MarkettotaltotalquantitymarginalvariablefixedtotalmarginaltotalQuantityQuantitysuppliedcostcostcostcostrevenuerevenueprofitPriceDemandSupplied10$5$71$516,00010,00011$77$615,00011,00012$84$714,00012,00013$92$813,00013,00014$101$912,00014,00015$111$12$1011,00015,000II. Monopolya. Fill in the table for the monopoly firm. Explain how you arrived at each numberb. What is the optimal output, price and profit of the firm? c. Compare and explain the monopoly differences in price, quantity and profit to the PC model in I above.Monopoly FirmMonopoly Markettotaltotalquantitymarginalvariablefixedtotalmarginaltotal QuantitysuppliedcostcostcostcostrevenuerevenueprofitPrice Demand7,000$5$71,000$8$147,0008,000$77,000$138,0009,000$84,000$129,00010,000$92,000$1110,00011,000$101,000$1011,00012,000$111,000$12,000$912,000 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.)

David · Accepted Answer

I. Perfect Competition 
         
a. Fill in the table for the perfectly competitive firm. Explain how you arrived at each number
A) Under perfect competition price is equal to marginal revenue and because firm is price taker firm marginal 
revenue will be equal to industry price.  Total cost is calculated by adding total variable cost and total fixed cost.  
 Because fixed cost do not changes with a change in output we have it equal to $12 at each unit of output.  Marginal 
cost is calculated using TCn – TCn-1 .Total revenue is calculated by multiplying price*cost and profit is calculated by 
subtracting total revenue from total cost.
b. What is the optimal output, price and profit of the firm?
B) The optimal output of firm is 13 units where firm MR = MC, the optimal 
price is $8 and optimal profit is $0
c. Is the firm in long or only short-run equilibrium? Explain.
C) The firm is in long run equilibrium because it is making normal profit. 

Perfectly Competitive Firm 
      
Perfect Competition  
Market 
  
total total
quantity marginal variable fixed total marginal total 
   
Quantity Quantity 
supplied cost cost cost cost revenue revenue profit 
 
Price Demand Supplied 
10 $5 $71 $12 $83 $5 $50 -$23 
 
$5 16,000 10,000 
11 $6 $77 $12 $89 $6 $66 -$23 
 
$6 15,000 11,

I. Perfect Competition a. Fill in the table for the perfectly competitive firm. Explain how you arrived at each number b. What is the optimal output, price and profit of the firm? c. Is the firm in...

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I. Perfect Competition
a. Fill in the table for the perfectly competitive firm. Explain how you arrived at each number
b. What is the optimal output, price and profit of the firm?
c. Is the firm in long or only short-run equilibrium? Explain.
Perfectly Competitive Firm	Perfect Competition Market
		total	total
quantity	marginal	variable	fixed	total	marginal	total			Quantity	Quantity
supplied	cost	cost	cost	cost	revenue	revenue	profit	Price	Demand	Supplied
10	$5	$71						$5	16,000	10,000
11		$77						$6	15,000	11,000
12		$84						$7	14,000	12,000
13		$92						$8	13,000	13,000
14		$101						$9	12,000	14,000
15		$111	$12					$10	11,000	15,000
II. Monopoly
a. Fill in the table for the monopoly firm. Explain how you arrived at each number
b. What is the optimal output, price and profit of the firm?
c. Compare and explain the monopoly differences in price, quantity and profit to the PC model in I above.
Monopoly Firm	Monopoly Market
		total	total
quantity	marginal	variable	fixed	total	marginal	total			Quantity
supplied	cost	cost	cost	cost	revenue	revenue	profit	Price	Demand
7,000	$5	$71,000			$8			$14	7,000
8,000		$77,000						$13	8,000
9,000		$84,000						$12	9,000
10,000		$92,000						$11	10,000
11,000		$101,000						$10	11,000
12,000		$111,000	$12,000					$9	12,000