   Pages: 6 (1274 words) / Published: May 19th, 2013
Task 1: Consider the following table of costs for the Winsome Widget Factory, which operates in a perfectly competitive market. The market price faced by this firm is \$6.00 per widget. a. Fill in the formula for Average Fixed Cost, Average Variable Cost, Average Total Cost, Marginal Cost, Total Revenue, Marginal Revenue, and Total Profit at the top of the column in the gray section within the table. b. Fill in the missing values for Total Fixed Cost, Total Variable Cost, Average Fixed Cost, Average Variable Cost, Average Total Cost, Marginal Cost, Total Revenue, Marginal Revenue, and Total Profit in the blue sections of the table. Winsome Widget Factory | Output | Total Fixed Cost | Total Variable Cost | Total Cost | Average Fixed Cost | Average Variable Cost | Average Total Cost | Marginal Cost | Total Revenue | Marginal Revenue | Total Profit | 0 | 100 | 0 | \$100 | 0 | 0 | 0 | 0 | 0 | 0 | -100 | 10 | 100 | 50 | 150 | 10 | 5 | 5 | 50 | 60 | 60 | -90 | 20 | 100 | 80 | 180 | 5 | 4 | 4 | 50 | 120 | 60 | -60 | 30 | 100 | 100 | 200 | 3.33 | 3.33 | 3.33 | 20 | 180 | 60 | -20 | 40 | 100 | 140 | 240 | 2.5 | 3.5 | 3.5 | 40 | 240 | 60 | 0 | 50 | 100 | 200 | 300 | 2 | 4 | 4 | 60 | 300 | 60 | 0 | 60 | 100 | 275 | 375 | 1.67 | 4.58 | 4.58 | 75 | 360 | 60 | -15 | 70 | 100 | 375 | 475 | 1.43 | 5.36 | 5.36 | 100 | 420 | 60 | -55 | 80 | 100 | 500 | 600 | 1.25 | 6.25 | 6.25 | 125 | 480 | 60 | -120 | 90 | 100 | 650 | 750 | 1.11 | 7.22 | 7.22 | 150 | 540 | 60 | -210 | 100 | 100 | 900 | 1,000 | 1 | 9 | 9 | 250 | 600 | 60 | -400 |

c. Determine the profit maximizing level of output. Explain how you arrived at that conclusion. The profit maximizing level is when Profit equals Marginal Cost or (P=MC.) It can also be: MC=MR so it is the production level corresponding to 60. So Q=50. In other words for an output of 50, the Marginal Cost or (MC) =6. Therefore, the firm will output 50. d. What is the total profit at the profit maximizing