Question

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Table 1

Price	Quantity	TR	MR	C	MC	AC	Unit profit	Total profit
$10	0	$0	-	$8	-	-	-	- $8
$10	1	$10	$10	17	$9	17.0	$1	-$7
$10	2	$20	$10	$24	$7	12.0	$3	-$4
$10	3	$30	$10	$30	$6	10.0	$4	$0
$10	4	$40	$10	$38	$8	9.5	$2	$2
$10	5	$50	$10	$48	$10	9.6	0	$2
$10	6	$60	$10	$59	$11	9.8	-$1	$1
$10	7	$70	$10	$71	$12	10.1	-$2	-$1
$10	8	$80	$10	$84	$13	10.5	-$3	-$4

Table 2

Price	Quantity	TR	MR	C	MC	AC	Unit profit	Total profit
$10	1	$10		7		7.0	0	$3
$9	2	$18	$8	$16	$9	8.0	-$1	$2
$8	3	$24	$6	$22	$6	7.3	0	$2
$7	4	$28	$4	$26	$4	6.5	0	$2
$6	5	$30	$2	$31	$5	6.2	-$3	-$1
$5	6	$30	$0	$38	$7	6.3	-$7	-$8
$4	7	$28	$2	$47	$9	6.7	-$7	-$19
$3	8	$24	$4	$57	$10	7.1	-$6	-$33

1. Which table represents competitive market? Which table represent a competitive firm and which, a non-competitive firm?

2. What is the equilibrium price and output in table 1? Table 2?

3. Calculate unit profits and total profits at equilibrium in both table?

Answer 1

Condition for equilibrium in competitive market:P=MC

P=MC

Equilibrium in table 1-

Quantity=5 and price=$10

Total profit=$2,Unit profit=0

Equilibrium condition for non-competitive equilibrium MR=MC

Quantity=4 and price =$7

Total profit=$2 and unit profit=0

Table 1 represents competitive equilibrium because price is fixed in competition,because firms are price takers.

Table 2 represents non-competitive equilibrium.