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 fomula 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 proift maxizing 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 grpah 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?

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

(AFC)
0
10
5
3
3
2
2
1
1
1
1
1

(AVC)
0
7
5
4
3
3
3
3
3
4
4
4

(ATC)
0
17.00
10.00
7.33
5.75
5.00
4.67
4.57
4.63
4.78
5.00
5.27

(MC)
0
7
3
2
1
2
3
4
5
6
7
8

Market
Price
Perfect
Competiti
Total
on
Revenue
$5
$0
$5
$5
$5
$10
$5
$15
$5
$20
$5
$25
$5
$30
$5
$35
$5
$40
$5
$45
$5
$50
$5
$55

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

(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 fomula 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
of monopoly profitablility" 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
curves. (14pt font)
e) On the completed spreadsheet data: high light (color) the entire row(s) showing the proift maxizing level (range) of production
f) Each grpah 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.
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 monoploist determines where to price his product
3. A monopoly is considered an inefficient use of resources for what two reasons?

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,

opoly Profit

so indicate the "area

bels for each.

well as TR and TC

on
the tab: Chart Tools,

Costs of
of Production
Production and
and Profit
Profit Ma
Ma
Costs
Analysis for
for the
the Perfect
Perfect Competiti
Competiti
Analysis
Structure
Structure

Microeconomics
Spring Semester
Brett's E-Portfolio

Total
Output/hr
0
1
2
3
4
5
6
7
8
9
10
11

Total
Fixed
Costs
(TFC)
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10
$10

Total
Variable
Costs
(TVC)
$0
7
10
12
13
15
18
22
27
33
40
48

Total
Costs
(TC)
$10
$17
$20
$22
$23
$25
$28
$32
$37
$43
$50
$58

Average
Fixed Costs
(AFC)
0
10
5
3
3
2
2
1
1
1
1
1

Average
Variable
Costs
(AVC)
0
7
5
4
3
3
3
3
3
4
4
4

Average
Total
Costs
(ATC)
0
17.00
10.00
7.33
5.75
5.00
4.67
4.57
4.63
4.78
5.00
5.27

Average Costs of Production

Production Costs ($)

18
16
14
12
10
8
6
4
2
0

Average Fixed Costs (AFC)

Average Variable Costs
(AVC)
Average Total Costs (ATC)
Marginal Costs (MC)
1

3
2

5
4

7
6

9
8

11
10 12

Output

Profit Maximization
$70
$60
$50
$40
Revanue and Costs

$30
$20

$70
$60
$50
$40
Revanue and Costs

$30
$20
$10
$0
0 1 2 3 4 5 6 7 8 9 10 11 12
Output

Measuring Total Profits

18
16
14
12

Average

10

Margina

Price and 8Cost per Unit

Margina

6
4
2
0
0

Output

10 11 12

uction
and Profit
Profit Maximization
Maximization
ction and
e Perfect
Perfect Competitive
Competitive Market
Market
e
Structure
Structure

Marginal Market Price

Costs
Perfect
Total
(MC)
Competition Revenue
$5
-$0
$5
7
$5
$5
3
$10
$5
2
$15
$5
1
$20
$5
2
$25
$5
3
$30
4
$5
$35
5
$5
$40
6
$5
$45
7
$5
$50
8
$5
$55

Marginal
Revenue
(MR)
-$5
$5
$5
$5
$5
$5
$5
$5
$5
$5
$5

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

Marginal
Marginal Costs
Costs =
= Marginal
Marginal Reven
Reven

Maximum Profit at Profit Maximiz

Total Costs of Production

$70
$60
Costs (AFC)

ble Costs

Costs (ATC)

s (MC)

$50
Dollar Costs
$40

Total Fixed Costs (TFC)

Total Variable Costs (TVC)

$30

Total Costs (TC)

$20
$10
$0
0

9 10 11 12

Output

1. When total profit reaches its maximum poi

revenue will be equal to marginal profit. Prod
at this level of output becase the extra units
more than they are worth to the company to

mization

2. If prices were to drop to $4.25 the new pro

maximizing level where MC=MR would be an
Total Revenue
Total Costs (TC)

3.The firm should not continue past this point

their total costs would be more than its total
the company would lose money.

at this level of output becase the extra units

more than they are worth to the company to

2. If prices were to drop to $4.25 the new pro

maximizing level where MC=MR would be an
Total Revenue
Total Costs (TC)

4 5 6 7 8 9 10 11 12
Output

tal Profits

Average Total Costs (ATC)

Marginal Costs (MC)
Marginal Revenue (MR)

10 11 12

3.The firm should not continue past this point

their total costs would be more than its total
the company would lose money.

s
s=
= Marginal
Marginal Revenues
Revenues

t at Profit Maximizing Output

s (TFC)

osts (TVC)

hes its maximum point, marginal

marginal profit. Production stops
case the extra units will cost
h to the company to produce.

to $4.25 the new profit

MC=MR would be an output of 6.

ntinue past this point because

e more than its total renevue and
money.

case the extra units will cost

h to the company to produce.

to $4.25 the new profit

MC=MR would be an output of 6.

ntinue past this point because

e more than its total renevue and
money.

Microeconomics
Spring Semester
Brett's E-Portfolio

Monolopy Profit
Profit Maximizing
Maximizing Analysis
Analysis
Monolopy

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

Total
Average
Revenue
Total
Total
Total Cost Marginal
(TR)
Cost (TC) Profit (TP)
(ATC)
Cost (MC)
0.00
10.00
-10.00
-7.80
14.00
-6.20
14.00
4.00
15.20
17.50
-2.30
8.75
3.50
22.20
20.75
1.45
6.92
3.25
28.80
23.80
5.00
5.95
3.05
35.00
26.70
8.30
5.34
2.90
40.80
29.50
11.30
4.92
2.80
46.20
32.25
13.95
4.61
2.75
51.20
35.10
16.10
4.39
2.85
55.80
38.30
17.50
4.26
3.20
60.00
42.70
17.30
4.27
4.40
63.80
48.70
15.10
4.43
6.00
67.20
57.70
9.50
4.81
9.00

Monopoly Profit Determination

$16.00
$14.00
$12.00

Price Per Unit

$10.00

Marginal Cos

$8.00

Demand, MC, MR, ATC

$6.00

Marginal Reve

Monopoly
Profit
$4.00

Average Tota

$2.00
$0.00
0

Output

10

11

12

13

$0.00
0

10

11

12

13

Output

Revenue - Cost Comparison

80.00
70.00

TR

60.00

TC

50.00

Total Revenu

40.00

TR, TC ($)

Total Cost (T

30.00
20.00
10.00
0.00
0

Output

10

11

12

13

Marginal
Revenue(
MR)
7.80
7.40
7.00
6.60
6.20
5.80
5.40
5.00
4.60
4.20
3.80
3.40

1.When total profit reaches its maximum point, marginal

revenue will be equal to marginal profit. Production stops at
this level of output becase the extra units will cost more than
they are worth to the company to produce. MC=MR is the
most efficent way to produce units so regardless of price is its
the optimal strategy for a monopoly.
2. A monopolist will use the demand curve to figure out how
the price of the product relates to the quanity demanded. When
quantity produced equals MC=MR that will maximize profits.
3. A monopoly is inefficient because it always produces less
and charge a higher price, The price is higher than the marginal
cost of production. This leads it to have market control, a
negative demand curve, and inefficent allocations of resources.

nation

Price Per Unit (Demand)

Marginal Cost (MC)

Demand Price
MC = MR

Marginal Revenus (MR)

Average Total Cost (ATC)

Average Total Costs

11

12

13

11

12

13

son

11

TR
Total Revenue (TR)
Total Cost (TC)

12

13