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29. Assume that a purely competitive firm has the schedule of costs given in the table below.
Output TFC TVC TC
0 $500 $ 0 $ 500
1 500 150 650
2 500 200 700
3 500 260 760
4 500 340 840
5 500 450 950
6 500 590 1090
7 500 770 1270
8 500 1000 1500
9 500 1290 1790
10 500 1650 2150
(a)
Chapter 08 – Pure Competition in the Short Run
Complete the table below to show the total revenue and total profit of the firm at each level of output
the firm might produce. Assume market prices of $50, $150, and $250.
Market price = $50 Market price = $150 Market price = $250
Output Total revenue Profit (+) or loss (−) Total revenue Profit (+) or loss (−)
Total revenue Profit (+) or loss (−)
0 $_____ $_____ $_____ $_____ $_____ $_____
1 _____ _____ _____ _____ _____ _____
2 _____ _____ _____ _____ _____ _____
3 _____ _____ _____ _____ _____ _____
4 _____ _____ _____ _____ _____ _____
5 _____ _____ _____ _____ _____ _____
6 _____ _____ _____ _____ _____ _____
7 _____ _____ _____ _____ _____ _____
8 _____ _____ _____ _____ _____ _____
9 _____ _____ _____ _____ _____ _____
10 _____ _____ _____ _____ _____ _____
(b) Indicate what output the firm would produce and its profits in the following table.
Price Quantity supplied Profit (+)
or loss (−)
$ 50_____ $_____
150 _____ _____
250 _____ _____
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30. Assume that a purely competitive firm has the schedule of average and marginal costs given in the table
below.
OutputAFC AVC ATC MC
0
1 $600 $200 $800 $200
2 300 150 450 100
3 200 140 340 120
4 150 145 295 160
5 120 160 280 220
6 100 180 280 280
7 86 205 291 360
8 76 232 314 460
9 66 276 342 580
10 60 320 380 720
(a) In the table below, complete the supply schedule for the competitive firm and state what the economic
profit will be at each price.
Price Quantity supplied Profit (+)
or loss (−)
$580_____ $_____
460 _____ _____
360 _____ _____
280 _____ _____
220 _____ _____
160 _____ _____
120 _____ _____
(b) If there are 100 firms in the industry and all have the same cost schedule, complete the market supply
schedule in the table below.
Quantity
demanded
Price Quantity
supplied
500 $580 _____
600 460 _____
700 360 _____
800 280 _____
900 220 _____
1000 160 _____
1100 120 _____
Answer the following questions: (1) What will the equilibrium price and quantity of the product be? (2)
What will the profits of each firm be? (3) Will firms tend to enter or leave the industry in the long run?
Explain.
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