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ECON 102 at PSU EXAM 2 Solution




Question;(12;Points)You are operating a firm in a perfectly;competitive market. In the short run, you have fixed costs of $30.;Your variable costs are given in the following table;Q;TVC;Tc;MC;0;0;30;1;70;100;70;2;120;150;50;3;150;180;30;4;190;220;40;5;270;300;80;6;360;390;90;Complete;the following table;Market Price;Profit maximizing;level of output;Profit;$48;4;$52;4;$75;4;$85;6;2. (10 Points)A monopolist faces a demand curve given;by;A) (2 points) What;quantity should the monopolist produce in order to maximize profit?;B) (2 points) What price;should the monopolist charge in order to maximize profit?;C) (2 points) How much;profit will the monopolist make?;D) (2 points) What is;the deadweight loss created by this monopoly (hint: compare the monopoly outcome with the perfectly competitive outcome).;E) (2 points) If the;market were perfectly competitive, what quantity would be produced?;3. (6 Points)List the three conditions that must be;met in order for a firm to successfully engage in price discrimination.;4.;(12 Points)Suppose a competitive firm can sell its;output for $6 per unit. The following table gives the firm?s short run;production function.;Labor;Output;Marginal output;0;0;1;20;20;2;50;30;3;90;40;4;110;20;5;120;10;6;124;4


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