Comments on Problem Set #3

People have been having issues with problem 4.

Here are the steps:

1. find MC for this "typical" firm.

2. make a table of MC and Q.

3. multiply Q by 100

4. change MC to P (Price).

Once you have P and Q (x 100) you have the industry supply. OK, for those who read this it should look like this:

P = MC	Quantity supplied
11	600
9	500
7	400
5	300
3	200

Now, plot the demand curve and this supply curve you've derived. You'll notice these prices are all odd but the demand curve prices are all even. So be careful.

You will have to "eyeball" the equilibrium. I'll tell you now, that equilibrium price will be less than 11 and more than 9.

Oh, and to find VC, you need to figure out FC. Then subtract FC from TC.

How do you find FC? Well, when output is zero you still have some TC, don't you? That would be your FC.

Try that.

Yeah, it is kind of difficult, but if you think of it as a puzzle you won't be so irritated. I'll go over it in class and give you the opportunity to fill in some details. Don't sweat it, but give it a shot.

Good luck.