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.

1. 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.
2. What is the MC=MR Rule?  To what market structures does this Rule apply?  Explain your answers.
3. Using Microsoft Excel, graph the data in Columns 9 and 10.
4. What is the profit maximizing (or loss minimizing) output for this firm?  Is there an economic profit?  Explain your answers.
5. Explain why a firm in pure competition is considered to be a “price taker.”
6. 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.
7. 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.