# Complete the shaded boxes (you can copy what you did last week for ...

## Transcribed Text

Complete the shaded boxes (you can copy what you did last week for columns D-L). Your task now is to consider how this firm would decide how much to produce as a monopoly. Suppose that the competitive market price is \$12.50 Then examine the graphs and answer the questions below the charts. The four graphs should look like a typical set of curves when you're done. The table presents a short run production function for a two-input production process. The two inputs are workers and machines. Workers cost \$75 each. The fixed cost of capital is \$100. Capital = \$100 wage = \$75 Number of Workers (L) Total Output (Q) Marginal Product of Labor Average Product of Labor Total Fixed Cost Total Variable Cost Total Cost Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost Price Total Revenue Marginal Revenue Average Revenue Profit 0 0 XXX XXX 100 0 100 XXX XXX XXX XXX XXX 0 XXX XXX 1 5 5 5.00 100 \$75 175 20.00 15.00 35.00 15 15 2 15 10 7.50 100 \$150 250 6.67 10.00 16.67 7.5 14 3 30 15 10.00 100 \$225 325 3.33 7.50 10.83 5 13 4 50 20 12.50 100 \$300 400 2.00 6.00 8.00 3.75 12 5 75 25 15.00 100 \$375 475 1.33 5.00 6.33 3 11 6 90 15 15.00 100 \$450 550 1.11 5.00 6.11 5 10 7 98 8 14.00 100 \$525 625 1.02 5.36 6.38 9.375 9 8 104 6 13.00 100 \$600 700 0.96 5.77 6.73 12.5 8 9 108 4 12.00 100 \$675 775 0.93 6.25 7.18 18.75 7 10 110 2 11.00 100 \$750 850 0.91 6.82 7.73 37.5 6 1. What is the Profit-Maximizing Level of Output? 2. Does this correspond with the spot where MR = MC in Chart 5? 3. What are your profits? 4. At what level of output does Marginal Revenue become negative? 5. Why? 6. What is the elasticity of demand between 50 and 75 units of output? 0 20 40 60 80 100 120 0 1 2 3 4 5 6 7 8 9 10 Chart 1 Total Output (Q) 0 5 10 15 20 25 30 0 1 2 3 4 5 6 7 8 9 10 Chart 2 Marginal Product of Labor Average Product of Labor 0 100 200 300 400 500 600 700 800 900 0 31 60 91 Chart 3 Total Fixed Cost Total Variable Cost Total Cost 0.00 5.00 10.00 15.00 20.00 25.00 5 7 9 111315171921232527293133353739414345474951535557596163656769717375777981838587899193959799101103105107109 Chart 4 Average Fixed Cost Average Variable Cost Average Total Cost Marginal Cost 0.00 5.00 10.00 15.00 20.00 25.00 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 Chart 5 Average Total Cost Marginal Cost Demand Marginal Revenue

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