ECON 201
PRINCIPLES OF MICROECONOMICS
HOMEWORK 5 (CHAPTER 12) PROBLEMS
DUE: WEDNESDAY, APRIL 13
1. You may submit an assignment with one name or with two names.
2. If you and a partner submit the assignment together, you must both be from the same section. You will both receive credit.
3. You must submit the homework assignment in your correct section.
4. The assignment can either be hand-written or typed on a computer—I don’t care as long as I can read it.
5. Assignments will be collected at the end of class on the due date. They must be submitted by the end of the class period. No Late Assignments!
6. Please staple your homework pages together with this page on top.
NAME # 1: _______________________________________
USD EMAIL: ______________________________
NAME # 2 (optional): _______________________________
USD EMAIL: ______________________________
*THIS IS THE LAST HOMEWORK ASSIGNMENT OF THE SEMESTER*
1. Draw a graph showing a firm that is operating at a loss in a perfectly competitive market. Be sure your graph includes the firm’s demand curve, marginal revenue curve, marginal cost curve, average total cost curve, and average variable cost curve. Please clearly label the area that represents the firm’s loss.
2. Frances sells earrings in the perfectly competitive earrings market. Her output per day and her costs are as follows:
|
Output per Day |
Total Cost |
|
0 |
$ 1.00 |
|
1 |
2.50 |
|
2 |
3.50 |
|
3 |
4.20 |
|
4 |
4.50 |
|
5 |
5.20 |
|
6 |
6.80 |
|
7 |
8.70 |
|
8 |
10.70 |
|
9 |
13.00 |
(a) Suppose the current equilibrium price in the earring market is P* = $ 1.80. (HINT: Be sure to use the “price = MR = MC” rule to answer these questions.)
- How many earrings will Frances produce?
- What price will she charge?
- How much profit (or loss) will she make?
Draw a graph to show me your answer. The graph should be clearly labeled and should include Frances’s demand, ATC, AVC, MC, and MR curves; the price she is charging; the quantity she is producing; and the area representing her profit or loss.
(b) Suppose the equilibrium price of earrings falls to P* = $ 1.00.
- Now how many earrings will Frances produce?
- What price will she charge?
- How much profit (or loss) will she make?
Like above, show your work and draw a graph to illustrate this situation. Use the same instructions from part (a).
(c) Lastly, suppose the equilibrium price of earrings falls to P* = $0.25.
- Now how many earrings will Frances produce?
- What price will she charge?
- How much profit (or loss) will she make?
3. What is the difference between a firm’s shutdown point in the short-run and in the long-run? Why are firms willing to accept losses in the short-run but not in the long-run?
4. Edward produces table lamps in the perfectly competitive desk lamp market.
(a) First, fill in the missing values in the following table:
|
Output per Week |
Total Cost |
AFC |
AVC |
ATC |
MC |
|
0 |
$ 100 |
|
|
|
|
|
1 |
150 |
|
|
|
|
|
2 |
175 |
|
|
|
|
|
3 |
190 |
|
|
|
|
|
4 |
210 |
|
|
|
|
|
5 |
240 |
|
|
|
|
|
6 |
280 |
|
|
|
|
|
7 |
330 |
|
|
|
|
|
8 |
390 |
|
|
|
|
|
9 |
460 |
|
|
|
|
|
10 |
540 |
|
|
|
|
(b) Suppose the equilibrium price in the desk lamp market is P* = $ 50. How many table lamps should Edward produce, and how much profit will he make?
(c) If next week the equilibrium price of desk lamps drops to P* = $ 30, should Edward shut down? Explain.
5. A student in a principles of microeconomics course makes the following remark:
The economic model of perfectly competitive markets is fine in theory but not very realistic. It predicts that in the long-run, a firm in a perfectly competitive market will earn no profits. No firm in the real world would stay in business if it earned zero profits.
Do you agree with this statement?
PAGE
3
Admin use case:
User use case:
Database design diagram:
|
Table |
Field Name |
Data Type |
Length |
Description |
|
Customer |
CustomerID |
Integer |
10 |
The ID number for each customer |
|
|
CustomerEmail |
Varchar |
25 |
The email for each customer |
|
|
LastName |
Varchar |
20 |
The last name for each customer |
|
|
Password |
Varchar |
6 |
The password for each customer |
|
|
PhoneNumber |
Integer |
6 |
The phone number for each customer |
|
|
City |
Varchar |
25 |
The city for each customer |
|
|
Country |
Varchar |
25 |
The country for each customer |
|
|
ShipAddress |
varchar |
30 |
That place that the product will be send to |
|
|
BillAddress |
Varchar |
30 |
The place that the bill will be send to |
|
|
UserName |
Varchar |
20 |
The user name for each customer |
|
Product |
ProductID |
Integer |
10 |
The ID number for each product |
|
|
ProductName |
Varchar |
20 |
The name for each product |
|
|
ProductPrice |
Integer |
10 |
The price for each product |
|
|
ProductImage |
Object |
35 |
The image for each product |
|
|
ProductDescription |
Varchar |
30 |
The description for each product |
|
|
ProductBrand |
Varchar |
20 |
The brand for each product |
|
|
ProductQuantity |
Integer |
30 |
The quantity for each product |
|
|
CategoryName |
Varchar |
20 |
The name for each category |
|
Employee |
EmployeeID |
Integer |
10 |
The ID number for each employee |
|
|
EmployeeName |
Varchar |
20 |
The name for each employee |
|
|
WorkingHours |
Integer |
20 |
The working hours for each employee |
|
Order |
OrderID |
Integer |
10 |
The ID number for each order |
|
|
CustomerID |
Integer |
10 |
Foreign key from the customer table |
|
|
ProductID |
Integer |
10 |
Foreign key from the product table |
|
|
EmployeeID |
Integer |
10 |
Foreign key from the employee table |
|
|
PaymentID |
Integer |
10 |
The number of the payment process that come from the bank |
|
|
Delivery |
Varchar |
30 |
The customer can choose if he want his products to be deliver for him or not |
|
|
Customer Evaluation |
Varchar |
50 |
Evaluation that the customer do it for the app in general |
|
|
Quantity |
Integer |
30 |
The quantity for each product |
|
|
Compliant&SuggestionID |
Integer |
10 |
The ID number for each compliant or suggestion |
|
|
CustomerID |
Integer |
10 |
Foreign key from the customer table |
|
Cart |
CustomerID |
Integer |
10 |
Foreign key from the customer table |
|
|
ProductID |
Integer |
10 |
Foreign key from the product table |
|
|
Quantity |
Integer |
30 |
The quantity for each product |
|
Promotion |
PromotionID |
Integer |
10 |
The ID number for each promotion |
|
|
PromotionDataFrom |
Date |
15 |
From which date the promotions will start |
|
|
PromotionDataTo |
Date |
15 |
The final date for the promotions |
|
|
ProductID |
Integer |
10 |
Foreign key from the product table |
|
|
NewPrice |
Integer |
10 |
The new price for the product after the promotion |
|
|
Description |
Varchar |
25 |
The description for each product after promotion |
|
|
Quantity |
Integer |
30 |
The quantity for each product after promotion |
|
|
Type |
Varchar |
20 |
The type of the promotion of the product if it is weekly offer or hot offer |
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