Cost and revenue

Sheet2

	Q	TC
	0	400
1	12	434
2	18	476
3	29	518
4	40	609
5	52	747
6	59	1005

Worksheet

	Costs and Revenue in Perfect Competition Template
	Suppose that the following table represents the cost structure of an apple farmer. The current market price for apples is $18. Assusme that this firm is in a perfectly competitive market structure.
	Review the "Formula Refresher" worksheet for forumlae and hints.
	Q1. Fill in the missing values in following table. Make sure to use the "formula" feature.
	Quantity of apples	Total Cost (TC)	Fixed Cost (FC)	Variable Cost (VC)	Marginal Cost (MC)	Average Fixed Cost (AFC)	Average Variable Cost (AVC)	Average Total Cost (ATC)	Marginal Revenue (MR)
	0	$ 400.00
	10	$ 500.00
	20	$ 580.00
	30	$ 700.00
	40	$ 850.00
	50	$ 1,030.00
	60	$ 1,250.00
	Q2. Use the Excel's chart feature to graph MC, AFC, AVC, and ATC. In addition, graph the MR curve. Remember that those costs and MR are on the Y-axis and quantity is on the X-axis.
	Q3. What is the profit-maximizing price and quantity for this firm?
	Price (P*)
	Quantity (Q*)
	Q4. Calculate the profit (or loss) for this firm.
	Profit/loss

MC 10 20 30 40 50 60 AFC 10 20 30 40 50 60 AVC 10 20 30 40 50 60 ATC 10 20 30 40 50 60 MR 0 10 20 30 40 50 60 10 20 30 40 50 60 0 10 20 30 40 50 60

Formula refresher

Total Cost (TC)	Variable Cost (VC) + Fixed Cost (FC)
Marginal Cost (MC)	Change in total cost / Change in quantity
Average Fixed Cost (AFC)	Fixed Cost / Quantity
Average Variable Cost (AVC)	Variable Cost / Quantity
Average Total Cost (ATC)	Total Cost / Quantity
Marginal Revenue (MR)	Change in total revenue / Change in quantity
Few other things to consider:	1) Variable cost is zero when no output is produced.
	2) Marginal revenue for a perfectly competitive firm is the market price.
	3) Profit is maximized when MR = MC
	4) Profit = (P-ATC) * Q
	5) Shutdown price: P = minAVC