Assignment 2 lasa 1 the costs of production

1. Assignment2 LASA 1: The Costs of Production
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Joseph Farms, Inc. is a small firm in the agricultural industry. They have asked you to help them
complete the limited data they have gathered in an effort to enable effective decision-making.
Some work can be done using MS Excel but it must be copied to an MS Word file for the final
submission of this assignment. To assist Joseph Farms, Inc., respond to the following:
 Using MS Excel or a table in MS Word, complete Table-1 (Joseph Farms, Inc., Cost and
Revenue Data).
o Assume that the price is $165.
o Assume the fixed costs are $125, at an output level of 1.
o Assume that the data represents a firm in pure competition.
o Show your calculations in summary form.
 Explain the MC=MR Rule. Describe the market structures to which this rule applies.
 Create a chart to illustrate the data in Columns 9 and 10.
 Describe the profit maximizing (or loss minimizing) output for this firm. Explain why or why
not there an economic profit?
 Explain why a firm in pure competition is considered to be a “price taker.”
(Assignment continues below Table-1.)
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
Level
Price
per unit
Total
Fixed
Cost
Total
Variable
Cost
Total
Cost
Average
Fixed
Cost
Average
Variable
Cost
Average
Total Cost
Marginal
Cost
Marginal
Revenue
Total
Revenue
0 $ - NA

2. 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
 Using the data in Table-1 (Joseph Farms, Inc., Cost and Revenue Data), complete Table-2
(Joseph Farms, Inc., Revenue/Profit/Loss Data). Show your calculations in summary form.
 Using the completed data in Table-2 (Joseph Farms, Inc., Revenue/Profit/Loss Data),
Identify 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-2: Joseph Farms, Inc., Revenue/Profit/Loss Data
Output
Level Price Total Revenue Profit or Loss
0
1
2
3
4
5
6
7
8
9
10

3. Save your MS Word file including your graphs or charts using the
filenameLastnameFirstInitial_M3A2 and submit it to the
Assignment 2 Grading Criteria
Maximum
Points
Accurately calculated cost data (total fixed, total, average fixed, average variable,
average total, and marginal) and revenue data (marginal and total) for output level
ranging from 1 to 10 in Table-1. Showed calculations in summary form. Correctly
assumed data represented a firm in pure competition. (40 points)
Completed Table-1 as Microsoft Excel spreadsheet or Word table. (8 points)
48
Explained the MC=MR Rule. (12 points)
Identified market structures the MC=MR Rule applies to. (8 points)
Explained why MC=MR Rule applies to these market structures. (12 points)
32
Graphed all the data in column 9 of Table-1 (marginal cost) as curves in Microsoft
Excel. (8 points)
Graphed all the data in column 10 of Table-1 (marginal revenue) as curves in Microsoft
Excel. (8 points)
16
Explained the profit maximizing (or loss minimizing) output for Joseph’s Farms, Inc. (14
points)
Explained whether or not there is an economic profit for Joseph’s Farms, Inc. (14
points)
28
Explained why a firm in pure competition is considered to be a “price taker.” 28
Accurately calculated price, total revenue, and profit or loss data for output level
ranging from 0 to 10 in Table-2 using data from Table-1. Showed calculations in
summary form. (10 points)
Completed Table-2 as Microsoft Excel spreadsheet or Word table. (2 points)
12
Accurately calculated the break-even output level (break-even point) for Joseph’s
Farms, Inc. using data in Table-2. Showed calculations in summary form. (8 points)
Explained what the firm’s operating output level would be given it is a purely
competitive firm.( 8 points)
16
Style (4 points): Tone, audience, and word choice.
Usage and Mechanics (4 points): Grammar, spelling, and sentence structure.
APA Elements (12 points): In text citations and references, paraphrasing, and
appropriate use of quotations and other elements of style.
20

4. Total: 200