I - Your response should be at least 200 words in length.

In the long run, economic profit of all firms in competitive market is zero. One way to tell a firm is competitive is to check if economic profit is zero. Do you agree? Explain.

Why would a firm choose to remain in an industry in which it makes an economic profit of zero?

Monopolists make substantial profit because they face inelastic demand for their product. Do you agree? Explain.

What does it mean to say that a perfectly competitive firm is a price taker? Can't a firm set any price it chooses?

Suppose that a perfectly competitive industry is in long-run equilibrium, and demand increases. Explain the short- and long-run effects on the firm and the industry.

II - Your response should be at least 75 words in length.

A perfectly competitive firm has total revenue and total cost curves given by:

TR = 100Q

TC = 5,000 + 2Q + 0.2 Q²

a. Find the profit-maximizing output for this firm.

b. What profit does the firm make?

A monopolist has demand and cost curves given by:

QD = 10,000 - 20P

TC = 1,000 + 10Q + .05Q²

c. Find the monopolist's profit-maximizing quantity and price.

d. Find the monopolist's profit.

Consider the following average variable cost of XYZ company:

AVC = 20-3Q+0.25Q2

e. What is the marginal cost?

f. At what output is AVC minimum?

g. What is the minimum value for AVC?

h. If price (P) = $15, should this firm continue to operate or shut down?