Assignment 1: Characteristics of the Various Market Structures
The market structures influence how price and output decisions are made by the firms in their respective structure. In all market structures, one of the primary goals is to maximize profits or minimize losses.
One of the major differences between these market structures is how price and output decisions are made, which in turn depends on the characteristics of each market structure. There are four market structures:
Perfect competition
Monopolistic competition
Oligopoly
Monopoly
Required:
Using Template A, construct a table that describes the various characteristics of each market structure.
Identify a firm for each of these market structures and explain why each firm belongs in the market structure identified.
Using Microsoft Excel, construct a graph for each of the market structures and explain how price and output decisions are made in each structure and how they differ.
How is marginal analysis used in the price and output decisions of firms in the various market structures?
Note: In Template A, address each of the questions above, using text boxes for narratives. Explain your answers and use examples
Assignment 2: Market Forms
The following questions address some of the price and output decisions faced by firms other than those found in perfect competition. Some numbers may be rounded.
Table 1
|
Output
|
Average Fixed cost
|
Average Variable Cost
|
Average Total Cost
|
Marginal Cost
|
Price
|
Total Revenue
|
Marginal Revenue
|
|
0
|
|
|
|
|
$ 345.00
|
|
|
|
1
|
$ 180.00
|
$ 135.00
|
$ 315.00
|
|
$ 300.00
|
|
|
|
2
|
$ 90.00
|
$ 127.50
|
$ 217.50
|
|
$ 249.00
|
|
|
|
3
|
$ 60.00
|
$ 120.00
|
$ 180.00
|
|
$ 213.00
|
|
|
|
4
|
$ 45.00
|
$ 112.50
|
$ 157.50
|
|
$ 189.00
|
|
|
|
5
|
$ 36.00
|
$ 111.00
|
$ 147.00
|
|
$ 165.00
|
|
|
|
6
|
$ 30.00
|
$ 112.50
|
$ 142.50
|
|
$ 144.00
|
|
|
|
7
|
$ 25.71
|
$ 115.70
|
$ 141.41
|
|
$ 126.00
|
|
|
|
8
|
$ 22.50
|
$ 121.90
|
$ 144.40
|
|
$ 111.00
|
|
|
|
9
|
$ 20.00
|
$ 130.00
|
$ 150.00
|
|
$ 99.00
|
|
|
|
10
|
$ 18.00
|
$ 139.50
|
$ 157.50
|
|
$ 87.00
|
|
|
Questions:
Complete Table 1. Summarize your calculations and use Microsoft Excel.
Using Excel, draw one graph showing average fixed costs, average variable costs, average total costs, marginal revenue, and marginal costs.
Using the data in the table and on your graph, what is the profit maximizing, or loss minimizing level of output? Explain and justify your answers.
What is a normal profit? What is an economic profit? Explain your answer using examples. Are normal profits being earned in this example? Are economic profits present for this firm in this example? Explain your answers.
Given the data in the table and the graph, how could you determine or identify the optimal plant size?
What is the difference between explicit and implicit cost? Explain your answers.
How would we determine if a cost is a fixed cost or a variable cost?
Note: Present your analysis in Microsoft Excel format. Enter non-numerical responses in the same worksheet using textboxes.