Microeconomics Course Assignment

In fulfillment of Course ePortfolio and CSIS requirement

This Assignment is required and totals 50 points

Part 1 Perfect Competition Analysis

Using the spread sheet data below complete the following steps:

1. Copy and paste the spread sheet data below to (Sheet 2)

2. Title this spread sheet: Costs of Production and Profit Maximization Analysis for the Perfect Competitive Market Structure
3. Place boarders around each cell in the spread sheet.
4. Expand the column titles for each of the 8 columns (ie) (TFC) = Total Fixed Costs (TFC). Make certain the titles are stacked and center
5. Be certain to BOLD all titles used throughout assignment
6. Calculate the appropriate fomula for each cell of the 8 blank columns
-(ATC) should be rounded to (2.00) decimals - no need to show dollar ($) signs
-All other columns should be single (5) or double digit (17) format

Construct the following Smooth Line Graphs:

a) A graph that compares: MC, ATC, AVC, AFC. Title this graph: Average Costs of Production. Be certain to appropriately label axis (10p
b) A graph that compares: TC, TVC, TFC. Title this graph: Total Costs of Production. Be certain to appropriately label axis (10pt font)
c) A graph that compares: TR with TC. Title this graph: Profit Maximization. Using the data spreadsheet determine what level of produc
most profitable. Insert a colored, vertical line that indicates this Profit Maximizing point. Shadow the line. Be certain to appropriately label a
d) A graph that compares: ATC, MC, and MR. Title this graph: Measuring Total Profits. Insert a colored, shadowed, vertical line indicatin
of production total profits are the greatest. Align this graph (d) under graph (c) at the appropriate profit maximizing production level.
Be certain to appropriately label the axis (10pt font)
e) On the completed spreadsheet data: high light (color) the entire row showing the proift maxizing level of production
f) On (e) above: Insert (arrowhead lines) indicating where MC = MR. Connect these arrows to a side-bar label: Marginal Costs = Margi
g) On (e) above: Insert (arrowhead lines) indicating where Maximum Profit at profit maximizing output. Connect these arrows to a side-b
Maximum Profit at Profit Maximizing Output.
h) Each grpah should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be found under the tab: C
Format, and Layout.
i) Insert a (Text Box) and answer the following questions:
1. Explain in your own words why MC=MR is a profit maximizing production level ?
2. Assume prices dropped to $4.25. What then would be the profit maximizing or loss minimizing level of production ?
3. Should the firm continue to operate at this point?

1. Explain in your own words why MC=MR is a profit maximizing production level ?
2. Assume prices dropped to $4.25. What then would be the profit maximizing or loss minimizing level of production ?
3. Should the firm continue to operate at this point?

Total
Output/hr
0
1
2
3
4
5
6
7
8
9
10
11

(TFC)
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

(TVC)
$0
7
10
12
13
15
18
22
27
33
40
48

(TC)

(AFC)

(AVC)

(ATC)

(MC)

Market
Price
Perfect
Competiti
Total
on
Revenue
$5

Total
Profit

Part 2 Monopoly Profitability Analysis

Using the spread sheet data below complete the following steps:
1. Copy and paste the spread sheet data below to (Sheet 3)
2. Title this spread sheet: Monopoly Profit Maximizing Analysis
5. Be certain to BOLD all titles and Axis used throughout assignment
6. Calculate the appropriate fomula for each cell of the (5) blank columns
-Each cell should show (2.00) decimal places value

Construct the following Smooth Line Graphs:

a) A graph that compares: Price/Unit Demand, Marginal Cost, Marginal Revenue, and Average Total Costs. Title this graph: Monopoly Pr
Determination. Be certain to appropriately label axis (14pt font)
b) Add to graph(a): colored dashed lines indicating (1) most profitable price level, (2) profit maximizing output, (3) ATC level. Also indicat
monopoly profitablility" by typing the words Monopoly Profit
c) Add to graph(a): arrows indicating Demand Price juncture, MC=MR, Average Total Costs. Connect these arrows to side-bar labels for ea
d) A graph that compares: TR with TC. Title this graph: Revenue - Cost Comparison. Be certain to appropriately label axis as well as T
curves. (14pt font)
e) On the completed spreadsheet data: high light (color) the entire row(s) showing the proift maxizing level (range) of production
f) Each grpah should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be found under the tab: C
Format, and Layout.
g) Insert a (Text Box) and answer the following question:
1. Explain in your own words why MC=MR is a profit maximizing production level for the Monopoly
2. Explain how the monoploist determines where to price his product
3. A monopoly is considered an inefficient use of resources for what two reasons?

Microeconomics Course Assignment

In fulfillment of Course ePortfolio and CSIS requirement

Part 2
Total
Output
Units
0
1
2
3
4
5
6
7
8
9
10
11
12

Price Per
Unit
(Demand)
$8.00
$7.80
$7.60
$7.40
$7.20
$7.00
$6.80
$6.60
$6.40
$6.20
$6.00
$5.80
$5.60

(TR)

(TC)
10.00
14.00
17.50
20.75
23.80
26.70
29.50
32.25
35.10
38.30
42.70
48.70
57.70

(TP)

(ATC)

(MC)

(MR)

arket Structure

acked and centered.

ely label axis (10pt font)

xis (10pt font)
at level of production is the
propriately label axis (10pt font)
ical line indicating at what level
uction level.

l Costs = Marginal Revenue.

arrows to a side-bar label:

d under the tab: Chart Tools,

(MR)

h: Monopoly Profit

evel. Also indicate the "area of

e-bar labels for each.

l axis as well as TR and TC

roduction
d under the tab: Chart Tools,

Costs of Production and Profit Maximization Ana

Perfect Competitive Market Structure
Total
Fixed
Costs
(TFC)
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

Total
Output/h
r
0
1
2
3
4
5
6
7
8
9
10
11

Total
Variable
Costs
(TVF)
0
7
10
12
13
15
18
22
27
33
40
48

Average Average Average

Fixed
Variable
Total
Marginal
Costs
Costs
Costs
Costs
(AFC)
(AVC)
(ATC)
(MC)
0.00
0
0
0
10.00
7
17
2
5.00
5
10
3
3.33
4
7
2
2.50
3
6
1
2.00
3
5
2
1.67
3
5
3
1.43
3
5
4
1.25
3
5
5
1.11
4
5
6
1.00
4
5
7
0.91
4
5
8

Total
Costs
(TC)
10
17
20
22
23
25
28
32
37
43
50
58

Average Costs of Production

Total Costs

18.00

$70

16.00

$60

14.00

$50

12.00
10.00

$40

8.00

$30

6.00

$20

4.00

$10

2.00
0.00

10

11

$0

Average Fixed Costs (AFC)

Average Variable Costs (AVC)

Total Fixed Costs (TFC

Average Total Costs (ATC)

Marginal Costs (MC)

Total Costs (TC)

1. Explain in your own words why MC=MR is a profit maximizing production level ?
- Marginal Cost is equal to Marginal return because this is the point where the company will start to
gain profit. If they use more labor they will pay more in money and not have the funds capital to
cover such cost. At least not to make a profit.
2. Assume prices dropped to $4.25. What then would be the profit maximizing or loss minimizing
level of production ?
- Total output would also drop to 7 and also everything else would be lower. There would be the sam
cost basically but yet the company would not gain much in return. For the company to continue to
maintain the same profit they would need to cut back on labor and other resources.

1. Explain in your own words why MC=MR is a profit maximizing production level ?
- Marginal Cost is equal to Marginal return because this is the point where the company will start to
gain profit. If they use more labor they will pay more in money and not have the funds capital to
cover such cost. At least not to make a profit.
2. Assume prices dropped to $4.25. What then would be the profit maximizing or loss minimizing
level of production ?
- Total output would also drop to 7 and also everything else would be lower. There would be the sam
cost basically but yet the company would not gain much in return. For the company to continue to
maintain the same profit they would need to cut back on labor and other resources.
3. Should the firm continue to operate at this point?
- Yes they are making a profit still and basically the same outcome.

ximization Analysis
t Structure
Market
Price
Perfect
Competit
Total
ion
Revenue
$5
$0
$5
$5
$5
$10
$5
$15
$5
$20
$5
$25
$5
$30
$5
$35
$5
$40
$5
$45
$5
$50
$5
$55

Total
Profit
($10)
($12)
($10)
($7)
($3)
$0
$2
$3
$3
$2
$0
($3)

Marginal
Revenue
(MR)
5
5
5
5
5
5
5
5
5
5
5

Marginal Costs = Marginal Revenues

Maximum Profit at Profit Max

Total Costs of Production

Profit Maximization
70
60
50
40
30
20
10

Total Fixed Costs (TFC)

Total Costs (TC)

vel ?
company will start to
he funds capital to

g or loss minimizing

here would be the same

mpany to continue to
urces.

10

Total Variable Costs (TVF)

11

12

Total Costs (TC)

Total Reve

vel ?
company will start to
he funds capital to

g or loss minimizing

here would be the same

mpany to continue to
urces.

Revenues

um Profit at Profit Maximizing Output

t Maximization

Measuring Total Profits

18
16
14
12
10
8
6
4
2
0
1

osts (TC)

Total Revenue

10

11

12

Average Total Costs (ATC)

Marginal Revenue (MR)

Marginal Costs (MC)

10

rofits

rginal Costs (MC)

10

11

Monopoly Profit Maximizing Analysis

Total
Output
Units
0
1
2
3
4
5
6
7
8
9
10
11
12

Price Per
Total
Unit
Revenue
(Demand)
(TR)
$8.00
0.00
$7.80
7.80
$7.60
15.20
$7.40
22.20
$7.20
28.80
$7.00
35.00
$6.80
40.80
$6.60
46.20
$6.40
51.20
$6.20
55.80
$6.00
60.00
$5.80
63.80
$5.60
67.20

Total
Costs
(TC)
10.00
14.00
17.50
20.75
23.80
26.70
29.50
32.25
35.10
38.30
42.70
48.70
57.70

Total
Profit
(TP)
-10.00
-6.20
-2.30
1.45
5.00
8.30
11.30
13.95
16.10
17.50
17.30
15.10
9.50

Average
Total
Costs
(ATC)
-14.00
8.75
6.92
5.95
5.34
4.92
4.61
4.39
4.26
4.27
4.43
4.81

Marginal
Cost (MC)
4.00
3.50
3.25
3.05
2.90
2.80
2.75
2.85
3.20
4.40
6.00
9.00

Monopoly Profit Determination

$16.00
$14.00
$12.00
$10.00

Price Per Un

$8.00

Average Tota
Marginal Co

$6.00

Marginal Rev

$4.00
$2.00
$0.00

10

11

12

Revenue-Cost Comparison
80.00
70.00
60.00
50.00

Total Costs/Total Revenue

40.00

Total

30.00

Total

Revenue-Cost Comparison
80.00
70.00
60.00
50.00

Total Costs/Total Revenue

40.00

Total

30.00

Total

20.00
10.00
0.00
1

Output

9 10 11 12 13

s
Marginal
Revenue
(MR)
7.80
7.40
7.00
6.60
6.20
5.80
5.40
5.00
4.60
4.20
3.80
3.40

tion

Price Per Unit (Demand)

Average Total Costs (ATC)
Marginal Cost (MC)
Marginal Revenue (MR)

12

Total Revenue (TR)

Total Costs (TC)

Total Revenue (TR)

Total Costs (TC)

10 11 12 13