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Cost of production of a small firm

Assignment 2: LASA 1: The Costs of Production

A small firm in the agricultural industry, Joseph Farms, Inc., has researched limited data for their firm. They are asking you to help them complete the information below so they will be able to make decisions based on the data.

Complete Table-1 (Joseph Farms, Inc., Cost and Revenue Data), either as a Microsoft Excel spreadsheet, or as a Microsoft Word table. Assume that the price is $165 and the fixed costs are $125, at an output level of 1. Also assume that the data represents a firm in pure competition. Show your calculations in summary form.

What is the MC=MR Rule? To what market structures does this Rule apply? Explain your answers.

Using Microsoft Excel, graph the data in Columns 9 and 10.

What is the profit maximizing (or loss minimizing) output for this firm? Is there an economic profit? Explain your answers.

Explain why a firm in pure competition is considered to be a “price taker.”

Using the data in Table-1 (Joseph Farms, Inc., Cost and Revenue Data), complete Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data), either as a Microsoft Excel spreadsheet, or as a Microsoft Word table. Show your calculations in summary form.

Using the data in Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data), what is the break even output level for this firm? If this firm is in pure competition, at what output level would they operate? Show your calculations in summary form

Table-1: Joseph Farms, Inc., Cost and Revenue Data

Column 1

Column 2

Column 3

Column 4

Column 5

Column 6

Column 7

Column 8

Column 9

Column 10

Column 11

Output

Price per unit

Total Fixed Cost

Total Variable Cost

Total Cost

Average Fixed Cost

Average Variable Cost

Average Total Cost

Marginal

Marginal Revenue

Total Revenue

Level

Cost

0

$ -

NA

1

$ 113.00

2

$ 213.00

3

$ 300.00

4

$ 375.00

5

$ 463.00

6

$ 563.00

7

$ 675.00

8

$ 813.00

9

$ 975.00

10

$ 1,163.00

Table-2: Joseph Farms, Inc., Revenue/Profit/Loss Data

Output

Price

Total Revenue

Profit or Loss

Level

0

1

2

3

4

5

6

7

8

9

10

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1 Answer

It looks like you need to create a table in Microsoft Word or Excel.  Since you have to create a graph, I recommend that you use excel.  Input your info into the cells in excel accordingly. Some info requires you to perform calculations.  To perform calculations, press the equal key on your keyboard, and begin typing your equation.  You can link your equation with the info from other cells by typing in the name of that cell. Cells are usually named as letters and numbers (A1, B2, C3, etc.). After you type your equation, hit enter.  Now, take the lower right corner of cell that has the calculated result, hold and drag down or across (depending on how your table is oriented).  You will see other results generate automatically.
 
To plot, highlight the info that you want to graph.  Go to your main header, go to insert, and select any of the graphs.