WE WRITE CUSTOM ACADEMIC PAPERS

100% Original, Plagiarism Free, Tailored to your instructions

Order Now!

production affect pricing and production quantity decisions of a firm in a perfectly competitive market.

Assignment 8
In this Assignment, you will be assessed on the following outcomes:
AB224-3: Examine how changes in the cost of production affect pricing and production quantity decisions of a firm in a perfectly competitive market.
GEL-8.5: Apply critical thinking to the field of study.

Assignment

In this Assignment, you will define and calculate the remaining six major cost elements of a business, when given the Total Costs and the Quantity Produced, as well as to use the computed costs to determine a minimum cost output level for that business. In addition, you will compute both the break-even price and the shut-down price for a hypothetical business in a perfectly competitive market, and determine if that business would incur an economic profit at various market prices, and should the firm continue to produce at each of those price levels.

Questions

Table 2.a. shows an LED light bulb manufacturer’s total cost of producing LED light bulbs.

Table 2.a.
Cases of LED light bulbs produced in an hour Total Cost
0 $4,500
10 $4,900
20 $5,100
30 $5,300
40 $5,400
50 $5,700
60 $6,700
70 $7,900
80 $9,700
90 $11,800

1. What is this manufacturer’s fixed cost? Explain why.

2. Assuming that you only know the Total Costs (TC) (as is shown in the Table 2.a. above) explain how you would calculate each of the following:

a. Variable Cost (VC);

b. Average Variable Cost (AVC);

c. Average Total Cost (ATC);

d. Average Fixed Cost (AFC); and,

e. Marginal Costs (of a single case).

3. In Table 3.a., for each level of output, insert into the table the values for:

a. the Variable Cost (VC);
b. the Average Variable Cost (AVC);
c. the Average Total Cost (ATC); and,
d. the Average Fixed Cost (AFC).
Table 3.a.
Cases of LED light bulbs produced in an hour Total Cost Variable Costs Average Variable Costs Average Total Costs Average Fixed Cost
a. b. c. d.
0 $4,500 n/a n/a n/a
10 $4,900
20 $5,100
30 $5,300
40 $5,400
50 $5,700
60 $6,700
70 $7,900
80 $9,700
90 $11,800

e. Given the information you computed in Table 3.a., what is the minimum cost output Level? Explain why.
4. Brenda Smith operates her own farm, raising chickens and producing eggs. She sells her eggs at the local farmers’ market, where there are several other egg producers’ also selling eggs by the dozen. (Brenda operates in a perfectly competitive market in which she is a “price taker.”) In order to make sure she does not lose money on selling eggs, she does an analysis of her costs for producing eggs as shown on Table 4.a.
Table 4.a.
Dozens of eggs Fixed Cost Total Cost Variable Costs Average Variable Costs per dozen Average Total Costs per dozen
0 $3.35 $3.35 n/a n/a n/a
10 $3.35 $10.50 $7.15 $0.72 $1.05
20 $3.35 $16.40 $13.05 $0.65 $0.82
30 $3.35 $23.10 $19.75 $0.66 $0.77
40 $3.35 $30.00 $26.65 $0.67 $0.75
50 $3.35 $36.50 $33.15 $0.66 $0.73
60 $3.35 $48.00 $44.65 $0.74 $0.80
70 $3.35 $64.40 $61.05 $0.87 $0.92
80 $3.35 $80.00 $76.65 $0.96 $1.00
90 $3.35 $135.00 $131.65 $1.46 $1.50

a. What is Brenda’s break-even price for a dozen of eggs? Explain how you found that answer.
b. What is Brenda’s shut-down price for a dozen of eggs? Explain how you found that answer.
c. If the market price of a dozen eggs at the local farmers’ market is $1.45 per dozen, will Brenda make an economic profit? Explain how you determined your answer.
d. If the market price of a dozen eggs at the local farmers’ market is $1.45 per dozen, should Brenda continue producing eggs in the short run? Explain how you determined your answer.
e. If the market price of a dozen eggs at the local farmers’ market is 72 cents per dozen, will Brenda make an economic profit? Explain how you determined your answer.
f. If the market price of a dozen eggs at the local farmers’ market is 72 cents per dozen, should Brenda continue producing eggs in the short run? Explain how you determined your answer.
g. If the market price of a dozen eggs at the local farmers’ market is 64 cents per dozen, will Brenda make an economic profit? Explain how you determined your answer.
h. If the market price of a dozen eggs at the local farmers’ market is 64 cents per dozen, should Brenda continue producing eggs in the short run? Explain how you determined your answer.
Discussion 9
Topic: Real-World Monopolies
Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly.
1. What characteristics of the industry make it a monopoly?
2. What is the impact of the monopoly power on its customers?
3. Why might government want to regulate natural monopolies?
4. How might such regulation be structured?

Our Service Charter

  1. Excellent Quality / 100% Plagiarism-Free

    We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
  2. Free Revisions

    We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
  3. Confidentiality / 100% No Disclosure

    We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
  4. Money Back Guarantee

    If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.
  5. 24/7 Customer Support

    We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

Instant Quote

Subject:
Type:
Pages/Words:
Single spaced
approx 275 words per page
Urgency (Less urgent, less costly):
Level:
Currency:
Total Cost: NaN

Get 10% Off on your 1st order!