Economia

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Workshop Three
By: Georgina Miranda
Facilitator: Adriana Ferrufino
ECON 123
Ana G Mendez University

Assignment 3
Written assignment: DUE DATE February 8th 2011

1. Using the data provided (see table below), expand the table by calculating the
Following. Use excel.
a. total fixed cost
b. total variable cost
c. total cost
d. marginal cost
e. average fixed cost
f.average variable cost
g. average total cost, total revenue
h. marginal revenue
i. profit or loss. Unit price is $7.50. Assume all units produced are sold.

2. For the cost table obtained in question 1, build the following graphs and answer
the corresponding question:
a. Graph: total fixed cost, total variable cost and total cost. Why is there a
straight line?
b.Graph: average fixed cost, average variable cost, average total cost. Why
does the average variable cost curve show an increasing trend while the
other two curves show a decreasing trend?
c. Graph: total variable cost, total fixed cost, total cost, revenue, profit or
loss. How many units would you produce and why?
d. Graph: average total cost, marginal cost,marginal income. What is the
optimum production

|Units Of Inputs |Rent Building |Salaries |Other Expenses |
|  |Fixed Cost |Fixed Cost |Variable Cost |Variable Costs |
| - | 1,275 | 150 | - | - |
|100 | 1,275 | 150 | 329 | 125 |
| 200 | 1,275 | 150 | 636 | 150 |
| 300 | 1,275 | 150 | 1,016 | 175 |
| 400 | 1,275 | 150 | 1,497 |200 |
| 500 | 1,275 | 150 | 2,093 | 225 |
| 600 | 1,275 | 150 | 2,815 | 250 |
| 700 | 1,275 | 150 | 3,670 | 275 |
| 800 | 1,275 |150 | 4,662 | 300 |
| 900 | 1,275 | 150 | 5,796 | 325 |

3. Describe the four types of market structures (perfect competition, monopoly, monopolistic competition, oligopoly) and provide at least one example for each type.
As an example FPL is a (private) monopoly because it is the onlyprovider of electricity in some parts of Florida. It is a natural monopoly because it experiences economies of scale: once the wires are underground the average cost of delivering electricity declines as more people has access to it. In addition, it is not efficient for other firms to incur in the costs of wiring again because they will probably not be able to sell enough to enjoy economies of scale.Summary cost of production:

|Term |Definition |Formula |
|Fixed Cost |Cost that do not change with the quantity |FC |
| |of output produced ||
|Variable Cost |Cost that change with the quantity of |VC |
| |output produced | |
|Total Cost |The market value of all the inputs that a...
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