ECON 102 Homework 4

# ECON 102 Homework 4

1. (25 total points). You are given the following information about the costs of a perfectlycompetitive firm.Quantity0123456TFC45454545454545TVC020354575120180You are hired to determine the profit-maximizing quantity of the firm for different market prices.Complete the table below.Market Price\$14\$18\$44\$53\$70Profit-maximizinglevel of outputTotalRevenueTotal CostProfit2. (14 points) The short-run supply curve of a perfectly competitive firm is the firms marginalcost curve.Carefully explain the two exceptions to the statement above.3. (21 points) Suppose that, in a perfectly competitive market at the profit-maximizing quantity,the market price is greater than average total cost. Carefully explain what will happen to thenumber of firms, the market supply, and the price of the good as we move from the short run tothe long run.4. (40 total points) Suppose a monopolist faces the following demand curve:P = 596 6Q. Marginal cost of production is constant and equal to \$20, and there are no fixedcosts.a) (8 points) What is the monopolists profit-maximizing level of output?b) (8 points) What price will the profit-maximizing monopolist charge?c) (8 points) How much profit will the monopolist make if she maximizes her profit?d) (8 points) What would be the value of consumer surplus if the market were perfectlycompetitive?e) (8 points) What is the value of the deadweight loss when the market is a monopoly?