Price Searcher Economics – Use the diagram below to show and explain the following

Name.Class Time & Day.IVCIrvine Valley College1.Homework – Price SearcherEconomics 1Use the diagram below to show and explain the following:$120MC1008060AC40AVC20DMRØ510152025303540Quantity (1000’s)a. Is this a price taker or a price searcher? How do you know this?b. Show (and clearly label) the profit maximizing or loss minimizing output.c. Explain why this quantity is the profit maximizing output. Why not produce onemore unit?d.e.f.g.Show (and clearly label)the amount of per-unit profit or loss.Show (and clearly label)the area of total profit.Show (and clearly label)the area of total variable cost.Show (and clearly label)the area of total fixed cost.Economics 1P-Searcher HomeworkPage 2$60MC504030AC20AVC10DMRØ51015202530354045Quantityh. Assume that this firm does not have to charge the same price to all buyers but t it is able toprice discriminate perfectly? What quantity will it produce? (Label this Qpd.) What will happento its total revenue? (Use a colored pen or pencil to outline the total revenue. Is theredeadweight loss? Explain.2.Evaluate the performance (price, quantity produced, and the level of profits) in a marketcharacterized by oligopoly in each of the following situations:a. if collusion is effective. (Label the price it will charge, Pm; and the quantity produced,Qm. Show the area of total revenue and label it clearly.)b. if firms are unable to cooperate and instead engage in intense competition. (Label theprice it will charge, Pc; and the quantity produced, Qc. Show the area of total revenue andlabel it clearly.)$MCDØQuantityEconomics 1P-Searcher HomeworkGroup AGroup B$$MC600600500500400400300300200200100Ø23 4 5 6 7Quantity (1000’s)MCD100D1Page 38Ø123 4 5 6 7Quantity (1000’s)83.Assume that you are a producer that is able to price discriminate. The diagrams below show thedemand and marginal cost curves for two different groups (Group A and Group B) in yourmarket. Given this information:a. show how many units will you sell to each group. Label these Qa and Qb.b. show how much will you charge each group? Label these Pa and Pb.c. which group’s demand is more elastic? Which is less elastic? Which group will be chargedthe higher price?4.The following diagram shows the cost and revenue curves for a firm in monopolisticcompetition.$MCACAVCDØQuantityMRa. In the diagram on the left, show the quantity this firm will produce and the price it willcharge; label these Q1 and P1. Show and label the area of total profit.b. Is this a long run or short run price and quantity for this firm? Explain.c. Use the diagram on the left to show what will be the price and quantity (oh, and perhaps thenew demand curve) in the long run. Explain how this long run price and quantity comesabout.