Principles of
Microeconomics Michael Bimpeh,
Ph.D
Project-Computations and Analysis
This is your project for the Principles of Microeconomics
course. The aim of this project is to help you integrate knowledge on some
separate topics in our course. The project involves computations and analyses;
hence, will enable you to demonstrate your mastery in economic numeric computations
and their meaning to firms.
Table
1 below shows quantities produced, and incomplete production costs and revenue
situations of a firm. Production Cost analysis in Chapter 7, and ideas on
Market Structures in Chapters 8, 9, and 10 will help you complete this project.
This project will be scored 100%.
Table 1
Production
and Costs and Revenue
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
12
|
TP
|
TFC
|
TVC
|
AFC
|
AVC
|
TC
|
MC
|
ATC
|
P
|
TR
|
MR
|
+P/-L
|
0
|
100
|
|
-
|
-
|
100
|
-
|
-
|
50
|
-
|
-
|
-
|
1
|
100
|
|
|
|
120
|
|
|
50
|
|
|
|
2
|
|
|
|
|
130
|
|
|
50
|
|
|
|
3
|
|
|
|
|
136
|
|
|
50
|
|
|
|
4
|
|
|
|
|
140
|
|
|
50
|
|
|
|
5
|
|
|
|
|
150
|
|
|
50
|
|
|
|
6
|
|
65
|
|
|
|
|
|
50
|
|
|
|
7
|
|
90
|
|
|
|
|
|
50
|
|
|
|
8
|
|
120
|
|
|
|
|
|
50
|
|
|
|
9
|
|
160
|
|
|
|
|
|
50
|
|
|
|
10
|
|
220
|
|
|
|
|
|
50
|
|
|
|
11
|
|
298
|
|
|
|
|
|
50
|
|
|
|
12
|
|
393
|
|
|
|
|
|
50
|
|
|
|
Definitions:
TP = Total Product (i.e.,
Quantities produced)
TFC = Total Fixed Cost
TVC = Total Variable Cost
AFC = Average Fixed Cost
AVC = Average Variable
Cost
TC = Total Cost
MC = Marginal Cost
ATC = Average Total Cost
P = Price
TR = Total Revenue
MR = Marginal Revenue
+P/-L = Profit/Loss where
+P is a Profit and -L is a Loss
IMPORTANT: YOU MUST COMPLY WITH THE FOLLOWING STANDARDS
(A)
When calculating the values for the boxes, use whole numbers only. DO NOT use decimals. Use approximations to the nearest whole
numbers.
Example 1: 50/7 is 7.14. In
such a situation, use 7.
Example 2: 50/4 is 12.5.
In such a situation, use 13.
Example 3: 50/3 is 16.66.
In such a situation, use 17.
(B)
Under +P/-L in column 12 in the Table, remember to put “+” before the values to
denote a Profit and a “-” before the values to denote a Loss. For example, if
at Q2 there is a Profit of 5, enter it as +5. Alternatively, if at Q2 there is
a Loss of 5, enter it as -5. This is the only way you can show whether the
amount you interred is a Profit or Loss. Refusing to add the + or – before the
values in column 12 will make them meaningless, and therefore, fetch you NO points.
Answer the Following Question
1. Complete the Table
above. Make sure to calculate the values for every box in the table.
2. (a) Is the firm
operating in a Short-Run or a Long-Run?
(b) In just one sentence or two sentences,
explain your answer.
3. Examine carefully your
MC values in column 7 when total product increases. Then provide a good
economic reasons to explain the nature of the MC values as total product
increases.
NOTE:
You can best answer this question by reading and understanding the inverse relationship between MC and MP.
Although there is no column for MP in the project, MC curve can best be
explained by understanding how MC and MP relate.
4. (a) Using Price (P)
values in column 9 and MR values in column 11, what type of market structure is
the firm?
(b) State three characteristics of this
type of market structure.