Question 1 (a)

  • Graph for the market and a typical firm

    MARKET MC Q Qf2 Q m 2 QUANTITY f ATC d2 = MR2 = Pm2 dl -MRI -p

  • Graph for a typical firm should include

    • Marginal Cost

    • Marginal Revenue

    • Demand (Price)

    • Average Total Cost

Question 1 (d)

  • Long-Run Average Total Cost

    • Short-run and long-run average total cost curves differ because a firm can choose its fixed cost in the long run.

    • If a firm plans on producing a high amount of output, it might make sense to have a high fixed cost

    • Conversely, if a firm plans on producing a small amount of output, it might make sense to have a low fixed cost

    Cost of case Economies of scale Diseconomies ofscale سس سكسر ATC6
ATCg \]RATC 3 Quantity of salsa (cases)

Question 2 (a)

  • Positive Social Externality

    Deadweight Loss Supply = Marginal Social Benefit DI = Marginal

Question 2 (b)

  • The price ceiling will increase the deadweight loss, because providers will decrease the quantity.

Question 3 (c)

  • the MFC curve (or the supply curve for labor) becomes horizontal at the minimum wage up to the quantity of minimum wage

    S=AC NMW

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