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##### ECON 102 at PSU EXAM 2 micro-economics

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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;0;0;1;70;2;120;3;150;4;190;5;270;6;360;Complete the following table;Market Price;Profit maximizing;level of output;Profit;\$48;\$52;\$75;\$85;2.;(10 Points);A monopolist faces a demand curve given by;P = 105 ? 3Q, where P is;the price of the good and Q is the quantity demanded. The marginal cost;of production is constant and is equal to \$15. There are no fixed costs;of production.;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;0;0;1;20;2;50;3;90;4;110;5;120;6;124;In the table below, you;will determine several points on the firm?s demand curve for labor. To do;this, you must determine how many workers the firm should hire for different;values of the wage rate in order to maximize profit. Complete the table;below;Wage Rate Per Worker;Quantity Demanded of;Workers;\$50;\$80;\$100;\$150

Paper#56709 | Written in 18-Jul-2015

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