You own four firms that produce different products. Thefollowing table summarize
ID: 2953035 • Letter: Y
Question
You own four firms that produce different products. Thefollowing table summarizes the conditons in each firm. Aftercalculating the missing numbers for each firm, make one of thefollowing four decisions regarding operations in each firm, andexplain why a particular decison is reached. a) continue producing the same output level b) shut down c) increase output d) decrease output Firm P MR TR Q TC MC ATC AVC A 11 8 20 200 5 9 B 3 1 100 1.5 2.5 2 C 4 2 200 2 7 5 D 8 5 10 70 5 6 Given the market share information in below table, calculatethe four firm concentration ratio and the Herfindahl index. FirmNumber Market Share (%) 1 35 2 25 3 15 4 15 5 10 You own four firms that produce different products. Thefollowing table summarizes the conditons in each firm. Aftercalculating the missing numbers for each firm, make one of thefollowing four decisions regarding operations in each firm, andexplain why a particular decison is reached. a) continue producing the same output level b) shut down c) increase output d) decrease output Firm P MR TR Q TC MC ATC AVC A 11 8 20 200 5 9 B 3 1 100 1.5 2.5 2 C 4 2 200 2 7 5 D 8 5 10 70 5 6 Given the market share information in below table, calculatethe four firm concentration ratio and the Herfindahl index. FirmNumber Market Share (%) 1 35 2 25 3 15 4 15 5 10Explanation / Answer
The complete table:
Firm
P
MR
TR
Q
TC
MC
ATC
AVC
A
11
8
220
20
200
5
10
9
B
3
1
300
100
250
1.5
2.5
2
C
4
2
200
50
350
2
7
5
D
8
5
80
10
70
5
7
6
Firm A: Increase production. At the current productionlevel, MR > MC, and the firm can increase total profit byproducing more.
Firm B: Decrease production. At the current productionlevel, MR < MC, and the firm can increase total profit byproducing less.
Firm C: Shut down. At the current production level, MR =MC. However, the firm is unable to cover its average variablecost, and therefore, should shut down.
Firm D: Produce at the same level. At the currentproduction level, MR = MC, and the firm is maximizing totalprofit.
Firm
P
MR
TR
Q
TC
MC
ATC
AVC
A
11
8
220
20
200
5
10
9
B
3
1
300
100
250
1.5
2.5
2
C
4
2
200
50
350
2
7
5
D
8
5
80
10
70
5
7
6
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