PRINCIPLES OF MICROECONOMICS
 |
| Fall 2020 |
|
|
Economics 101 PRINCIPLES OF MICROECONOMICS |
|
|
|
| | HOME | SYLLABUS | CALENDAR | ASSIGNMENTS | ABOUT PROF. GIN | |
The instructions for submitting this homework are the same as with previous assignments. When calculations are required, show the general formula for each variable. The homework is due by the end of the day on Friday, November 6.
1. Suppose the market for headphones is perfectly competitive. The industry price for the headphones is $24, and a typical firm has the following total cost data:
| q | TC |
| 0 | 10 |
| 1 | 33 |
| 2 | 53 |
| 3 | 70 |
| 4 | 90 |
| 5 | 114 |
| 6 | 143 |
a. Calculate the TR, MR, and MC for each level of output.
b. What condition must be met for the firm to maximize profits? What is the profit maximizing level of output and price for this firm? How much profit would be made?
.
2. Now suppose that some firms have been able to differentiate their headphones and the market has become monopolistically competitive. They have also been able to reduce the cost of production. A typical firm now has the following demand schedule and total cost data:
| q | P | TC |
| 0 | 40 | 8 |
| 1 | 35 | 23 |
| 2 | 30 | 34 |
| 3 | 25 | 48 |
| 4 | 20 | 67 |
| 5 | 15 | 92 |
| 6 | 10 | 123 |
a. Calculate the TR, MR, and MC for each level of output.
b. What condition must be met for the firm to maximize profits? What is the profit maximizing level of output and price for this firm? How much profit would be made?