1 To find the average total cost (ATC), average variable cost (AVC), marginal cost (MC), and average

fixed cost (AFC) equations, we need to differentiate the total cost function with respect to
quantity (Q).

The total cost function is given as TC = 200 + 9Q - 0.14Q^2 + 0.005Q^3.

To find the ATC, we divide the total cost by the quantity:

ATC = TC / Q

Substituting the total cost function, we get:

ATC = (200 + 9Q - 0.14Q^2 + 0.005Q^3) / Q

Simplifying this equation, we have:

ATC = 200/Q + 9 - 0.14Q + 0.005Q^2

To find the AVC, we divide the variable cost by the quantity:

AVC = VC / Q

Since variable cost (VC) is equal to total cost (TC) minus fixed cost (FC), we have:
VC = TC - FC

Substituting the total cost function and rearranging, we get:

VC = (200 + 9Q - 0.14Q^2 + 0.005Q^3) - FC
VC = 200 + 9Q - 0.14Q^2 + 0.005Q^3 - FC

Dividing both sides by Q, we obtain:

AVC = (200/Q) + 9 - 0.14Q + 0.005Q^2 - FC/Q

To find the MC, we differentiate the total cost function with respect to quantity:
MC = d(TC)/dQ

Taking the derivative of each term in the total cost function, we get:
MC = d(200)/dQ + d(9Q)/dQ - d(0.14Q^2)/dQ + d(0.005Q^3)/dQ

Simplifying this equation, we have:

MC = 0 + 9 - 0.28Q + 0.015Q^2

Lastly, to find the AFC, we subtract the AVC from the ATC:
AFC = ATC - AVC

Substituting the equations for ATC and AVC, we get:

AFC = (200/Q + 9 - 0.14Q + 0.005Q^2) - ((200/Q) + 9 - 0.14Q + 0.005Q^2)
AFC = 200/Q - (200/Q)
AFC = 0

Therefore, the AFC equation is simply AFC = 0.

In summary, the equations for ATC, AVC, MC, and AFC are as follows:

ATC = 200/Q + 9 - 0.14Q + 0.005Q^2

AVC = (200/Q) + 9 - 0.14Q + 0.005Q^2 - FC/Q
MC = 9 - 0.28Q + 0.015Q^2
AFC = 0
L To determine the profit-maximizing output for John's small factory, we need to find the level of
.

production that maximizes the difference between total revenue (TR) and total cost (TC). This
difference represents the profit earned by the factory.

The profit function (π) can be calculated by subtracting the total cost function from the total revenue
function:

π = TR - TC

Given that TR = 5.4Q and TC = 30 + 3Q + 0.03Q^2, we can substitute these values into the profit
function:

π = 5.4Q - (30 + 3Q + 0.03Q^2)

Simplifying further:

π = 5.4Q - 30 - 3Q - 0.03Q^2

Combining like terms:

π = -0.03Q^2 + 2.4Q - 30

To find the profit-maximizing output, we need to find the value of Q that maximizes this profit
function. This can be done by taking the derivative of the profit function with respect to Q and setting
it equal to zero.

Taking the derivative of π with respect to Q:

dπ/dQ = -0.06Q + 2.4

Setting dπ/dQ equal to zero:

-0.06Q + 2.4 = 0

Solving for Q:

-0.06Q = -2.4
Q = -2.4 / -0.06
Q = 40

Therefore, the profit-maximizing output for John's factory is a production level of 40 Playstations.
3.1. To find the price and quantity that will maximize the total revenue, we need to
find the maximum of the total revenue curve. The total revenue curve is
calculated by multiplying the quantity by the price, which gives us: Total Revenue
= 25Q - 0.0018Q2. To find the maximum of the Total Revenue curve, we must
take the derivative of the equation and set it equal to 0. The derivative of Total
Revenue is 25 - 0.0036Q, and when we set it equal to 0, we get Q = 6,944.
Therefore, the price and quantity that will maximize the total revenue is Price =
$18.06 and Quantity = 6,944 meals.

3.2. To find the profit maximization price and quantity for Lucky Food, we need to
subtract the variable cost of $5 per meal from the total revenue equation. This
gives us the Profit equation as follows: Profit = 20Q - 0.0018Q2 - 5000. To find
the maximum of the Profit curve, we must take the derivative of the equation and
set it equal to 0. The derivative of Profit is 20 - 0.0036Q, and when we set it equal
to 0, we get Q = 13,889. Therefore, the price and quantity that will maximize the
profit is Price = $12.11 and Quantity = 13,889 meals.

3.3. The market structure when only one supplier is present in the market is called
a Monopoly.
4.1. In a duopoly market structure with two perfect competitors, such as Lucky Food
and the second company, the calculation of profit maximization will change because
the firms can now collude to set a common price. Since both firms have the same
costs and produce the same product, they can agree to a price that maximizes their
combined profits. This is known as a "collusive equilibrium."

To calculate profit maximization in this case, we need to find the price that equates
the marginal revenue (MR) with the marginal cost (MC). Since the firms have agreed
on a common price, the MR for both firms is the same, and we can use the following
equation to find the profit-maximizing price:

P = MR = MC

where P is the price, MR is the marginal revenue, and MC is the marginal cost.

4.2. This market structure can be called an "oligopoly" because there are only two
firms present in the market. The mutual agreement between the firms to maintain the
same price is an example of "collusive behavior."
S
~

.
In a market where perfect competition exists, firms are price takers, meaning they
have no control over the market price and must accept it as given. In this scenario, if
one more perfect competitor enters the market, it would lead to an increase in supply
and potentially impact the profitability of the existing firms.

Profitability:
Under perfect competition, firms aim to maximize their profits. Profit is calculated by
subtracting total costs from total revenue. If a firm's total revenue exceeds its total
costs, it will make a profit. Conversely, if total costs exceed total revenue, the firm will
incur losses. At the break-even point, total revenue equals total costs, resulting in
zero profit or loss.

When a new competitor enters the market, several factors come into play that can
affect the profitability of all firms involved:

1. Increased competition: The entry of a new competitor intensifies competition

within the market. This can lead to lower prices as firms try to attract customers and
gain market share. Lower prices can reduce profit margins for all firms.

2. Increased supply: With the entry of a new competitor, the overall supply in the
market increases. This can lead to a downward pressure on prices due to excess
supply relative to demand. As prices decrease, profit margins may shrink or even turn
negative for some firms.

3. Market share redistribution: The entry of a new competitor may result in a

redistribution of market share among existing firms. If the new competitor attracts
customers away from existing firms, their sales and profits may decline.

Considering these factors, it is likely that the three companies in question would
experience reduced profitability or even losses when faced with increased
competition from another perfect competitor entering the market. The intensified
competition and potential price reductions could impact their ability to generate
profits.

However, it is important to note that specific outcomes would depend on various

factors such as cost structures, efficiency levels, differentiation strategies, and
demand elasticity. Each firm's ability to adapt and differentiate itself from competitors
can influence its profitability in the face of increased competition.
6 .
a. If there were many suppliers of diamonds, the price would be
$11,000 and the quantity would be 2,000.

b. If there were only one supplier of diamonds, the price would be

$12,000 and the quantity would be 1,000.

c. If Russia and South Africa formed a cartel, the price would be

$9,000 and the quantity would be 4,000. If the countries split the
market evenly, South Africa's production would be 2,000 and its
profit would be $2 million (2,000 x $1,000). If South Africa increased
its production by 1,000 while Russia stuck to the cartel agreement,
South Africa's profit would increase to $3 million (3,000 x $1,000).

d. Cartel agreements are often not successful because of the

incentives for individual members to cheat and increase production
in order to increase profits. This causes the price to decrease and
leads to a decrease in overall profits for the cartel. Additionally,
members may not be able to agree on how to split the market,
leading to disputes that can weaken the agreement.