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Chapter 14 1. Chart. Market for portable, flat-sc reen TVs. Quantity Total Cost Marginal Cost Price...

Chapter 14

1. Chart. Market for portable, flat-sc

reen TVs.

Quantity Total Cost Marginal Cost Price Total Revenue Marginal Revenue
0 $500 ---- $350 ----
1 $550 $350
2 $600 $350
3 $800 $350
4 $1000 $350
5 $1250 $350
  1. Give the total fixed cost? Fill in the Marginal Cost for the entire chart.
  2. How can you determine total revenue? Fill in TR for the chart.
  3. Fill in marginal revenue for the chart. At what quantity will the manufacturer produce and maximize profit?
  4. What type of firm is this TV manufacturer? How can you tell?


2. Draw the MC, ATC, MR & D curve for the perfectly competitive firm. Show equilibrium such that Q=200 & P = $5.

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Answer #1
Q TC MC=Change in TC P TR=(P)(Q) MR=Change in TR
0 500 - 350 0 -
1 550 50 350 350 350
2 600 50 350 700 350
3 800 200 350 1050 350
4 1000 200 350 1400 350
5 1250 250 350 1750 350

(a) Total fixed cost = $500. Marginal cost is the change in total cost.

(b) Total revenue is calculated by multiplying price by quantity.

(c) Marginal revenue is calculated by change in the total revenue. The profit maximizing condition is when P=MR=MC, so the profit maximizing output = more than 5 units of output , it is may be 6 or 7 units of output at which P=MC.

(d) TV manufacturer firm is a perfectly competitive firm because price is equal to marginal revenue at each level of output.

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