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 formula 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
font)
d) A graph that compares: ATC, MC, and MR. Title this graph: Measuring Total Profits. Insert a colored, shadowed, vertical line indicatin
level 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 profit maximizing 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
Revenue.
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 graph 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?

Structure

nd centered.

axis (10pt font)

t font)
of production is the
ely label axis (10pt

indicating at what
on level.
= Marginal

o a side-bar label:

the tab: Chart Tools,

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

(MR)

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 formula 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
"area of monopoly profitability" 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
TC curves. (14pt font)
e) On the completed spreadsheet data: high light (color) the entire row(s) showing the profit maximizing level (range) of production
f) Each graph should include the use of (gradient, texture, and shape effects (preset 2)) of your choice. Most will be found under the tab: C
Tools, 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 monopolist determines where to price his product
3. A monopoly is considered an inefficient use of resources for what two reasons?

opoly Profit

so indicate the

bels for each.

well as TR and

tion
the tab: Chart

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)

Costs of Production and Profix Maximization Analysis Perfect Competition

Total
Output/hr

Total
Fixed
Cost
(TFC)

0
1
2
3
4
5
6
7
8
9
10
11

$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

Total
Average Average
Average Marginal
Variable
Total
Fixed
Variable
Total Cost
Cost
Cost
Cost (TC) Cost
Cost
(ATC)
(MC)
(TVC)
(AFC)
(AVC)
$0
7
10
12
13
15
18
22
27
33
40
48

$10
$17
$20
$22
$23
$25
$28
$32
$37
$43
$50
$58

0
10
5
3
3
2
2
1
1
1
1
1

0
7
5
4
3
3
3
3
3
4
4
4

0.00
17.00
10.00
7.33
5.75
5.00
4.67
4.57
4.63
4.78
5.00
5.27

-7
3
2
1
2
3
4
5
6
7
8

Market Price
Perfect
Competition
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5

Total C

Average Costs of Production

Production Costs

18
16
14
12
10
8
6
4
2
0

$70
$60
Average Fixed Cost (AFC)
Average Variable Cost
(AVC)

1 2 3 4 5 6 7 8 9 10 11

Output

$50
$40

Dollar Costs

$30

Average Total Cost (ATC)

$20

Marginal Cost (MC)

$10
$0

1 2 3 4 5

Ou

ompetition

Total
Revenue

Total
Profit

Marginal
Revenue
(MR)

$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55

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

-$5
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5

Marginal Cost = Marginal Revenue

Maximum Profit at Profix Maximizing Output

Total Costs of Production

$70
$60
$50
Total Fixed Cost (TFC)

$40

Costs

Total Variable Cost (TVC)

$30

Total Cost (TC)

$20
$10
$0

1 2 3 4 5 6 7 8 9 10 11

Output

1 2 3 4 5 6 7 8 9 10 11

$0

Output

1 2 3 4 5

Ou

Profit Maximization
$70
$60
$50
$40

Revenue and Costs

Total Cost (TC)

$30

Total Revenue

$20
$10
$0

9 10 11

Output

Measuring Total Profits

Price and Cost per Unit

18.00
16.00
14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00

Average Total Cost (ATC)

Marginal Cost (MC)
Marginal Revenue (MR)

Output

$0

1 2 3 4 5 6 7 8 9 10 11

Output

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
$7.80
$7.60
$7.40
$7.20
$7.00
$6.80
$6.60
$6.40
$6.20
$6.00
$5.80
$5.60

0.00
7.80
15.20
22.20
28.80
35.00
40.80
46.20
51.20
55.80
60.00
63.80
67.20

Total
Cost
(TC)

Total
Profit
(TP)

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

-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
Marginal Marginal
Total
Cost
Revenue
Costs
(MC)
(MR)
(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

4.00
3.50
3.25
3.05
2.90
2.80
2.75
2.85
3.20
4.40
6.00
9.00

7.80
7.40
7.00
6.60
6.20
5.80
5.40
5.00
4.60
4.20
3.80
3.40

Monopoly Profit Determination

$16.00
$14.00

Demand Price

$12.00
$10.00

Price, Marginal Revenur, and Costs

M onopoly Profit

$8.00
$6.00
$4.00
$2.00
$0.00

Output

Price Per Unit (Demand)

Average Total Costs (ATC)

MC = MR

Marginal Cost (MC)

Marginal Revenue (MR)

Average Total
Costs

mand Price

MC = MR

erage Total
Costs

$2.00
$0.00

Output