# Worksheet

## Worksheet on Perfect Competition for Unit 8:

Welcome to Acme Widgets. The Acme Company manufactures widgets and competes in a Perfectly Competitive market structure. In fact, all widgets are the same, regardless of who made them. The widget industry is huge, with many firms, and Acme, like all the other firms can sell all it wants without affecting the market price. The following table represents the current short-run revenue, costs, and profits for Acme.

Then you need to complete the remaining columns using the data given. You can then answer the questions below using the data you have calculated. TIP: For questions that require an answer in money, please do not use dollar signs but use decimals. Ex: if the answer were \$9.99 or -\$9.99, you should enter either 9.99 or -9.99 respectively. If the amount is less than a dollar, be sure to put a 0 for the dollar amount such as: 0.33

HINT: You are only given data for total costs. It first appears that you don’t know anything about how the total cost is split into fixed cost and variable cost. But, it’s there. It’s hiding. Ask yourself the following questions and you can find out what total fixed costs are. Then you can subtract the Total Fixed Costs from Total Costs to get Total Variable Costs.

1. Variable costs vary directly with the quantity you produce. So, if you produce zero units (Q=0), would you have any variable costs?
2. Using the answer to this previous question, how much of Total Costs would be Total Fixed Costs when you produce Q=0?
3. If Total Fixed Costs are indeed “fixed”, and if you know what total fixed costs are at Q=0, then what would total fixed costs be for all the other quantities?