Unit 7 [Microeconomics] Unit 7 Assignment: Perfect Competition and the Supply Curve Name: - Course Number: - Section Number: - Unit Number: - 7 Date: - Problem 1 Joe Brown’s dairy operates in a perfectly competitive marketplace. Joe’s machinery costs $500 per day and is the only fixed input. His variable costs are comprised of the wages paid to the few workers he employs at the dairy and the grain he feeds to his dairy cows. The variable cost associated with each level of output is given in the accompanying table. Gallons of Milk Variable Cost 0 - 1000 $ 2,100 2000 $ 2,200 3000 $ 2,900 4000 $ 3,680 5000 $ 5,180 a. Calculate the total cost, the marginal cost per unit, the average variable cost, and the average total cost, for each quantity of output. Gallons of Milk FC VC TC MC AVC ATC 0 $500 - - - - 1000 500 $ 2,100 2000 500 $ 2,200 3000 500 $ 2,900 4000 500 $ 3,680 5000 500 $ 5,180 b. What is the break-even price? c. What is the shut-down price? d. Suppose that the price at which Joe can sell milk is $1.50 per gallon. In the short run, will Joe earn a profit? e. In the short run, should he produce or shut down? f. Now suppose that the price at which Joe can milk is $1.00 per gallon. In the short run, will Joe earn a profit? g. In the short run, should he produce or shut down? h. Finally, Suppose that the price at which Joe can sell milk is $0.75 per gallon. In the short run, will Joe earn a profit? i. In the short run, should he produce or shut down? Problem 2 Suppose that Media Cable is a single-price monopolist in the market for cable in Anywhere, Iowa. Media has five potential customers: Morgan, Larry, Clyda, Janet, and Tom. Each of these customers are willing to purchase cable service, but only if the price is just equal to, or lower than, his or her willingness to pay. Morgan’s willingness to pay is $130; Larry’s, $100; Clyda’s, $80; Janet’s, $40; and Tom’s, $0. Media Cable’s marginal cost per cable package is $40. The demand schedule for cable service packages is shown in the accompanying table. Price of Cable Service Quantity of Cable Service Demanded 160 0 130 1 100 2 80 3 40 4 0 5 a. Calculate Media Cable’s total revenue and its marginal revenue Price of Cable Service Qty of Cable Service demanded Total Revenue Marginal Revenue $160 0 - 130 1 100 2 80 3 40 4 0 5 b. Explain why a monopolist, such as Media Cable, faces a downward-sloping demand curve c. Explain why the marginal revenue from an additional sale is less than the price of the service d. Suppose Media Cable currently charges $80 for its service. If it lowered the price to $40, how large is the price effect? e. How large is the quantity effect? f. What is the profit maximizing quantity and price for Media Cable? --------------------- References: Microeconomics: ...

1. Unit 7
[Microeconomics]
Unit 7 Assignment: Perfect Competition and the Supply Curve
Name: -
Course Number: -
Section Number: -
Unit Number: - 7
Date: -
Problem 1
Joe Brown’s dairy operates in a perfectly competitive
marketplace. Joe’s machinery costs $500 per day and is the only
fixed input. His variable costs are comprised of the wages paid
to the few workers he employs at the dairy and the grain he
feeds to his dairy cows.
The variable cost associated with each level of output is given
in the accompanying table.
Gallons of Milk
Variable Cost
0
-
1000
$ 2,100
2000
$ 2,200
3000
$ 2,900
4000
$ 3,680
5000

2. $ 5,180
a. Calculate the total cost, the marginal cost per unit, the
average variable cost, and the average total cost, for each
quantity of output.
Gallons
of Milk
FC
VC
TC
MC
AVC
ATC
0
$500
-
-
-
-
1000
500
$ 2,100
2000
500
$ 2,200
3000

3. 500
$ 2,900
4000
500
$ 3,680
5000
500
$ 5,180
b. What is the break-even price?
c. What is the shut-down price?
d. Suppose that the price at which Joe can sell milk is $1.50 per
gallon. In the short run, will Joe earn a profit?
e. In the short run, should he produce or shut down?
f. Now suppose that the price at which Joe can milk is $1.00 per
gallon. In the short run, will Joe earn a profit?
g. In the short run, should he produce or shut down?

4. h. Finally, Suppose that the price at which Joe can sell milk is
$0.75 per gallon. In the short run, will Joe earn a profit?
i. In the short run, should he produce or shut down?
Problem 2
Suppose that Media Cable is a single-price monopolist in the
market for cable in Anywhere, Iowa. Media has five potential
customers: Morgan, Larry, Clyda, Janet, and Tom.
Each of these customers are willing to purchase cable service,
but only if the price is just equal to, or lower than, his or her
willingness to pay. Morgan’s willingness to pay is $130;
Larry’s, $100; Clyda’s, $80; Janet’s, $40; and Tom’s, $0.
Media Cable’s marginal cost per cable package is $40. The
demand schedule for cable service packages is shown in the
accompanying table.
Price of Cable Service
Quantity of Cable Service Demanded
160
0
130
1
100
2
80
3
40
4
0
5

5. a. Calculate Media Cable’s total revenue and its marginal
revenue
Price of
Cable Service
Qty of Cable
Service demanded
Total Revenue
Marginal Revenue
$160
0
-
130
1
100
2
80
3
40
4
0
5

6. b. Explain why a monopolist, such as Media Cable, faces a
downward-sloping demand curve
c. Explain why the marginal revenue from an additional sale is
less than the price of the service
d. Suppose Media Cable currently charges $80 for its service.
If it lowered the price to $40, how large is the price effect?
e. How large is the quantity effect?
f. What is the profit maximizing quantity and price for Media
Cable?
---------------------
References:
Microeconomics: Unit 7 Assignment: Perfect Competition and
Monopoly
Content (15 points)
Points Possible
Points Earned
Problem 1: Perfect Competition Joe Brown’s Diary
For each quantity of output: (a)
· Correctly calculated total costs.
· Correctly calculated marginal cost per unit.
· Correctly calculated average variable cost.
· Correctly calculated average total cost.
2
· Correctly calculated the break-even price. (b)
· Correctly calculated the shutdown price. (c)
1

7. · Discussed if a profit can be earned at $1.50 per gallon. (d)
· Discussed if Joe should produce or shut down if the price per
gallon is $1.50. (e)
2
· Discussed if a profit can be earned at $1.00 per gallon. (f)
· Discussed if Joe should produce or shut down if the price per
gallon is $1.00. (g)
2
· Discussed if a profit can be earned at $0.75 per gallon. (h)
· Discussed if Joe should produce or shut down if the price per
gallon is $0.75. (i)
2
Problem 2: Monopoly Media Cable Company
· Correctly calculated the total revenue and the marginal
revenue. (a)
· Explained downward slopping monopolist demand curve. (b)
· Explained why the marginal revenue from an additional sell is
less than the price of the service. (c)
· Correctly calculated the price effect. (d)
· Correctly calculated the quantity effect. (e)
· Correctly calculated profit maximizing quantity and price. (f)
6
Analysis (6 points)
Work demonstrates synthesis of concepts, research, and
experience.
2
Work demonstrates the student’s ability to tie relevant
information to real-life applications.

8. 2
Analysis exceeds basic comprehension to demonstrate higher-
order thinking.
2
Writing (4 points)
Correct use of APA 6th edition format, all sources used to
support the paper are referenced
2
Sentences are clear, concise, and direct; tone is appropriate,
spelling, grammar, and punctuation are correct.
2
Total
25
Reverse this program. Do NOT run this
program. This is C code and your program
should not be run. You are to create similar
(names and order may differ) program given the
binary program that you were given. there are
about 250 lines to the program. You should
include some description in the program that
you making.