Problem Set #2 (Note: On this problem, use EXCEL to generate numbers. Please replace the below table with your answers ON THIS SHEET. Similarly, in the rest of the assignment use EXCEL and insert figures and tables from EXCEL onto this sheet. 1. Consider the total profit function π = TR (31-0)Q = TC (20+Q+2Q²) Create a table that shows Total Revenue, Total Cost and Total Profit, (in your table, let quantity run from 0 to 10 in increments of 1.) Indicate in your table where total profits are maximized

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5. Consider the cost for a firm as described by the function: 3000 C(q) = 200 + q². 21 a. What are the fixed cost and variable cost function? b. Derive functions that describe the average cost and the marginal cost of production? c. If the average cost is $300 per unit of output, and 950 units of output are produced what is the cost of production? Show your work.

With the following data: Quantity=2,000 Variable costs= $2,000 Fixed costs= $10,000 Price= $1 what is the: Total cost= Total revenue= Profit= Marginal Costs=

12. A firm’s production is represented by the following function: Q = L0.4 K0.6 . The rental rate of capital (r) is $30 and the wage rate (w) is $5. For a given level of output, what should be the ratio of capital to labor in order to minimize costs? How much capital and labor should be used to produce 600 units of output? What is the total cost? What is the short run total cost if output is decreased to 300 units? What would be the optimal choice of capital and labor in the long run in order to produce 300 units of output? What is the long-run total cost? Does this production function exhibit increasing, decreasing, or constant returns to scale? Please answer based on the cost calculations in parts c and d.

Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories O = 100 Q = 200 Q = 300 Q = 400 Q = 500 O = 600 1 520 400 320 400 560 800 660 480 320 320 480 660 800 560 400 320 400 520 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the previous…

Month (m):           4                                              Day (d):  1 Use the two numbers above, m and d, to complete the cost function for a perfectly competitive firm: Cost (q) = m q2 + d =                                                                   (30) For a cost function like yours, Marginal Cost (MC) = 2 m q . Specifically, what are the following for the cost function you wrote out above? Fixed Cost = Average Total Cost = Cost (q)/q = Variable Cost = Average Fixed Cost = FC/q = Marginal Cost = 2 m q = Average Variable Cost = VC/q = (15) Fill in the table with your values from your cost function. q Total Cost AVC AFC ATC MC 0 0 0 -- -- -- 1           2           3           4           5           6

TR = 25Q - 2Q? TC = 32 + 5Q Please create a graph illustrating relationship between the Total Revenue and Total Cost function for 0

Use the information in the graph to the right to find the values for the following at an output level of 50. 100- MC The marginal cost is $ (Enter a numeric response using an integer.) The total cost is $ ATC AVC The variable cost is $ 56: The fixed cost is $ 45... 38...... 0+ 50 Quantity of output

4. Various measures of cost Douglas Fur is a small manufacturer of fake-fur boots in San Francisco. The following table shows the company's total cost of production at various production quantities. Fill in the remaining cells of the following table. Average Variable Cost (Dollars per pair) Average Total Cost (Dollars per pair) Quantity Total Cost Marginal Cost Fixed Cost Variable Cost (Pairs) (Dollars) (Dollars) (Dollars) (Dollars) 120 1 210 2 270 3 315 4 380 5 475 630