check out the attachment

Complete
Session 4 questions and upload answers as a Word document.
1. Technical Questions 1, 2, 3, and 5 at end
of Ch. 7.
2. Application Questions 1, 3, and 5 at end
of Ch. 7.
Technical Questions
1.
For each of the following graphs, identify the
firm’s profit-maximizing (or loss-minimizing) output. Is each firm making a
profit? If not, should the firm continue to produce in the short run?
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2.Consider
a firm in a perfectly competitive industry. The firm has just built a plant
that cost $15,000. Each unit of output requires $5 worth of materials. Each
worker costs $3 per hour.

a. Based
on the information above, fill in the table on the following page.
b. If the
market price is $12.50, how many units of output will the firm produce?
c. At
that price, what is the firm’s profit or loss? Will the firm continue to
produce in the short run? Carefully explain your answer.
d. Graph
your results.

3. The following graph shows
the cost curves for a perfectly competitive firm. Identify the shutdown point,
the breakeven point, and the firm’s short-run supply curve.
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5Draw graphs showing a perfectly competitive firm and industry in long-run
equilibrium
a. How do you
know that the industry is in longrun equilibrium?
b. Suppose that
there is an increase in demand for this product. Show and explain the short-run
adjustment process for both the firm and the industry.
c. Show and
explain the long-run adjustment process for both the firm and theindustry. What
will happen to the number of firms in the new long-run equilibrium?
Application
Questions
1.

1.
Discuss how the facts in the opening case study
and the subsequent discussion of the potato industry illustrate the lack of
control over prices by individual potato producers in a competitive market, the
response to high prices predicted by the model of perfect competition, and the
attempts by producers in a competitive market to gain control over price. Check
recent business publications to find out how successful the United Potato
Growers of America cooperative has been since the time of this chapter’s case
study.
3 The following facts characterize the
furniture industry in the United States.

a. The
industry has been very fragmented, so that few companies have the
financial backing to make heavy investments in new technology and
equipment.
b. In
1998, only three U.S. furniture manufacturers had annual sales exceeding
$1 billion. These firms accounted for only 20 percent of the market
share, with the remainder split among 1,000 other manufacturers.
c.
Capital spending at one manufacturer, Furniture Brands, was only 2.2
percent of sales compared with 6.6 percent at Ford Motor Company.
Outdated, labor-intensive production techniques were still being used by
many firms.
d.
Furniture manufacturing involves a huge number of options to satisfy
consumer preferences, but this extensive set of choices slows production
and raises costs.
e. Small
competitors can enter the industry because large manufacturers have not
built up any overwhelming advantage in efficiency.
f. The
American Furniture Manufacturers Association has prepared a public
relations campaign to “encourage consumers to part with more of their
disposable income on furniture.”
g. In
fall 2003, a group of 28 U.S. furniture manufacturers asked the U.S.
government to impose antidumping trade duties on Chinese-made bedroom
furniture, alleging unfair pricing.
h. The
globalization of the furniture industry since the 1980s has resulted from
technological innovations, governmental implementation of economic
development strategies and regulatory regimes that favor global
investment and trade, and the emergence of furniture manufacturers and
retailers with a capacity to develop global production and distribution
networks. The development of global production networks using Chinese
subcontractors has accelerated globalization in recent years. Discuss how
these facts are consistent with the model of perfect competition

5In a perfectly
competitive industry, the market price is $25. A firm is currently
producing 10,000 units of output, its average total cost is $28, its
marginal cost is $20, and its average variable cost is $20. Given these
facts, explain whether the following statements are true or false: a. The firm is
currently producing at the minimum average variable cost.
b. The firm should
produce more output to maximize its profit.
c. Average total
cost will be less than $28 at the level of output that maximizes the
firm’s profit.

Hint: You should assume normal U-shaped cost curves for this problem.