ECON 2302
HOMEWORK PROBLEMS
FOR PART 5
The purpose of doing these problems is to increase your understanding
of the material.
It will help you on quizzes and exams. You do not have to turn in this
work. I will not go
over these problems specifically in class. Read the assigned chapters
and come to class.
Check on the completed work which is on reserve in the SCC library.
After doing that,
if you still have difficulties, come to see me during my office hours.
----
Dr. Cohick
1. Fill in the blanks in this table:
|
Price |
Quantity |
Total Revenue (TR) |
AVC |
AFC |
ATC |
Total Cost (TC) |
Profit/ Loss |
|
$10 |
100 |
|
$4 |
|
$6 |
|
|
|
$40 |
2000 |
|
|
$1 |
$46 |
|
|
|
$25 |
198 |
|
$21 |
$2 |
|
|
|
2. Fill in the blanks in this table:
|
P |
MC |
ATC |
Is this perfectly competitive firm earning a profit? |
Can this firm increase its profit (reduce its loss)? |
|
$40 |
$40 |
$30 |
|
|
|
$30 |
$30 |
$35 |
|
|
|
$25 |
$20 |
$23 |
|
|
|
$20 |
$15 |
$18 |
|
|
3. Based on the characteristic shown, identify the type of market structure (perfect competition, monopoly, monopolistic competition, oligopoly).
|
Characteristic: |
Market Structure: |
|
A few sellers |
|
|
Easy entry and exist |
|
|
Significant barriers to entry |
|
|
Homogeneous product |
|
|
Interdependent |
|
|
One seller |
|
|
Innovation |
|
|
Blocked entry |
|
|
Many small buyers and sellers |
|
|
Price taker |
|
|
Make their version of the product unique |
|
|
Worried about market share |
|
4. Calculate the following data and plot the TR curve and MR curve on the same graph. Describe the relationship between these two curves.
|
P |
Q |
TR |
MR |
|
$10 |
1 |
|
|
|
$9 |
2 |
|
|
|
$8 |
3 |
|
|
|
$7 |
4 |
|
|
|
$6 |
5 |
|
|
|
$5 |
6 |
|
|
|
$4 |
7 |
|
|
|
$3 |
8 |
|
|
|
$2 |
9 |
|
|
|
$1 |
10 |
|
|
5. Consider the (non-Apple) PC industry. In 2000, assume the following firms had these market shares: Dell 20%, HP 16%, Compac 10%, Gateway 8%, IBM 7%, others 39%. Now assume, for 2007, the following firms had these market shares: HP 30%, Dell 26%, Lexmark 20%, Gateway 6%, others 18%. IBM sold its PC business to Lexmark. HP bought Compac. Answer the following questions:
a. In terms of market structure, what is happening in this industry? _________________
_______________________________________________________________________
_______________________________________________________________________
b. Describe how market share has changed. ____________________________________
_______________________________________________________________________
_______________________________________________________________________
c. What is your prediction for future change in this industry? ______________________
_______________________________________________________________________
_______________________________________________________________________
6. Hellman’s Mayonnaise reached the mature stage of the
industry cycle in the early 1900s. It is still there. Other products have left
the mature stage and proceeded into decline. Why hasn’t this product entered
into the decline stage? _______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
7. Fill out the blanks in this table:
|
Proposed merger |
Type of merger |
|
Goodyear and Michelin |
|
|
Georgia Pacific and Centex Home Builders |
|
|
McGraw-Hill and Pepsico |
|