Discussion: LO1 to LO4 Name: Please submit by 11:59 pm on October 5th on Brightspace in the dropbox for marks. 1. A business currently charges $14 for their product. The quantity demanded at that price is 15000 units. The business wants to increase their price to $20. They expect that demand will decrease to 10000 units. What is the company’s price elasticity of demand? Interpret your answer? 2. Complete the chart below with average variable cost, average fixed cost, average total cost and marginal cost Output Variable Cost 1 2 4 6 8 10 5 10 14 28 60 130 Average Variable Cost Fixed Cost Average Fixed Cost Total Cost 20 20 20 20 20 20 3. Given the graph below, calculate total revenue, total cost and profit. Average Total Cost Marginal Cost 4. Fill in the following revenue chart. Is the company operating in perfect competition or a monopoly? What additional information would we need to determine the profit maximizing quantity for this firm? Quantity 1 2 3 4 5 6 7 Price Firm Receives $100 $85 $70 $50 $30 $15 $0 Total Revenue 5. Price ($) Demand (thousands of computers) Supply (thousands of computers) 1500 1 16 1400 2 14 1300 3 12 1200 4 10 1100 5 8 1000 6 6 900 7 4 800 8 2 700 9 1 Average Revenue Marginal Revenue Gigatech produces computers. They are trying to determine what is the best price to charge for their computers and how much they should supply. a. Given the demand and supply schedule above, what is the equilibrium price? b. There is a shortage of chips needed for the computers. Which way will the supply curve shift? What impact does that have on price and supply? c. What role could microeconomics and macroeconomics play in the scenario in question (b)? Think on an individual level – how might individual behaviour change in the face of this? On a macro level – how might the government intervene in this scenario and how would that change the price and quantity demanded?