Cost And Revenue

A firm operating in perfect competition has no influence over market price. It can sell any amount at the market-clearing price. The only one major decision to make then is about what quantity should be produced. When it decides the quantity to produce, then this quantity—along with the prices prevailing in the market for output and inputs—will determine the firm’s total revenue, total costs, and ultimately, level of profits.

For the Costs and Revenue in Perfect Competition Assignment, you will submit an MS Excel spreadsheet and a paper (word document) in Waypoint.

In the Costs and Revenue in Perfect Competition Template Download Costs and Revenue in Perfect Competition Template(MS Excel), fill in the missing values in the given table.

Make sure to use the “formula” feature.(The numbers in the table change. So, if you don’t use the “formula”, your answers will be incorrect because of the changing numbers.) Please refer Excel Formulas and Functions TutorialLinks to an external site. for guidance.

  • Calculate marginal cost (MC), marginal revenue (MR), average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC).
  • Graph all the cost curves and the MR curve.
  • Find the profit-maximizing price and output.
  • Calculate the profit (or loss).

In your paper, based on the readings for the week and your calculations in the worksheet, answer the following question:

  • Explain if the firm should remain open or temporarily shut down when the price drops to $10.
  • Discuss why firms in perfectly and monopolistically competitive markets stay in business despite having zero economic profit in the long run.

The Costs and Revenue in Perfect Competition paper


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