Mt445 Unit 4 Assignment

Unit 4 Assignment

Student Name:

Please answer the following questions. Submit as a Microsoft Word® document to the Dropbox when completed.

1. How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.

The demand curve is downward sloping in a perfectly competitive market whereas the line is horizontal in a market demand curve. The line is horizontal because of the set price. If the product was priced below the market price then it would lose revenue because of lack of sales by the consumer.

2. A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $140.

Output FC VC TC TR Profit/Loss

0 $90 $ 0 90 0 -50

1 90 90 180 140 -40

2 90 170 260 280 20

3 90 290 380 420 40

4 90 430 520 560 40

5 90 590 680 700 20

6 90 770 860 840 -20

a. Complete the table.

b. What level of output should the firm produce to maximize profits? 4

3. How does the demand curve faced by a monopoly differ from the demand curve faced by a perfectly competitive firm? Explain.

The demand curve for a monopoly is set by the owner whereas in a perfectly competitive firm the price is already set and fixed.

4. The following table provides market share information about the soft-drink industry.

|Company |Market Share |

|Coca-Cola |37% |

|Pepsi-Co |35 |

|Cadbury Schweppers...