Assignment 2: LASA 1: The Costs of Production

Assignment 2: LASA 1: The Costs of ProductionJoseph 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).Assume that the price is $165.Assume the fixed costs are $125, at an output level of 1.Assume that the data represents a firm in pure competition.Show your calculations.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 is 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 DataColumn 1Column 2Column 3Column 4Column 5Column 6Column 7Column 8Column 9Column 10Column 11OutputLevelPrice per unitTotal Fixed CostTotal Variable CostTotal CostAverage Fixed CostAverage Variable CostAverage Total CostMarginalCostMarginal RevenueTotal Revenue0 $ – NA1 $ 113.002 $ 213.003 $ 300.004 $ 375.005 $ 463.006 $ 563.007 $ 675.008 $ 813.009 $ 975.0010 $ 1,163.00Using 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.Table-2: Joseph Farms, Inc., Revenue/Profit/Loss DataOutputLevelPriceTotal RevenueTotal Costs from Table 1 Profit or Loss012345678910