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Microeconomics Assignment: Firm Analysis

The document is an assignment for ECN-201: Principles of Microeconomics at Independent University, Bangladesh, detailing various problems related to perfectly competitive firms, profit maximization, and monopoly pricing. It includes calculations for production levels, economic profit, and decision-making for firms under different market conditions. The assignment covers theoretical applications of microeconomic principles through practical examples.

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42 views1 page

Microeconomics Assignment: Firm Analysis

The document is an assignment for ECN-201: Principles of Microeconomics at Independent University, Bangladesh, detailing various problems related to perfectly competitive firms, profit maximization, and monopoly pricing. It includes calculations for production levels, economic profit, and decision-making for firms under different market conditions. The assignment covers theoretical applications of microeconomic principles through practical examples.

Uploaded by

tutanuta87
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Independent University, Bangladesh

ECN-201: Principles of Microeconomics


Spring 2021
Assignment - 2

1. The following table provides the information of a perfectly competitive firm


Number of Labors Number of Candy Bars Produced
Per day
1 80
2 150
3 200
4 240
5 250

a. Using the information in the table, find the number of candies the firm should produce if
the wage rate is $20 and candy bars are sold for $0.50. (Assume there is no fixed cost)
b. Find the economic profit.

2. A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has
average revenue of $10, average total cost of $8, and fixed costs of $200.
a. What is its profit?
b. What is its average variable cost?

3. Ameera’s flower shop is a profit-maximizing, competitive firm. Ameera sells flower baskets for
$27 each. Her total cost each day is $280, of which $30 is a fixed cost. She sells 10 flower baskets
a day. What should be Ameera’s short-run decision concerning shutdown and her long-run decision
concerning exit and why?

4. Silk Road Bus is a single-price monopoly. Columns 1 and 2 of the table set out the market
demand schedule and columns 2 and 3 set out the total cost schedule:

Price Quantity demanded Total Cost


($/trip) (trips per week) ($/ week)
220 0 80
200 1 160
180 2 260
160 3 380
140 4 520
120 5 680

a. Construct Silk Road’s total revenue and marginal revenue schedules.


b. Draw a graph of the market demand curve and Silk Road’s marginal revenue curve.
c. Find Silk Road’s profit-maximizing output and price and calculate the firm’s economic
profit.

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