Principles of Economics Student Name:___________________Dr. Bresnock Page 2Principles of Economics Student Name:___________________Economics 201 ClassTime: _______________ California State Polytechnic University, PomonaDr. BresnockComputer Project = Competition Module Assignment (60 points)Please limit your answers to the spaces provided. If necessary, write on the back of thepage. Do not attach printout or additional pages. All questions pertain to theCompetition module in the SimEcon® software package. Make sure that you have read the “Competition Manual” and SimEcon® OperationInstructions”. These materials may be found at the Class Web site prior to beginning theassignment. For many of the assignment’s questions, it will be necessary to refer to thoseinstructions. For many of the assignment’s questions, it will be necessary to refer to yourtext. Note that this assignment and module provides an example of a perfectly competitivefirm and market, so all the usual assumptions of this model apply.Open the Competition module of SimEcon©. You will see a table called Firm’s ShortRun Costs. Print out a copy of this table for your own use. It will be useful later in theassignment. Click “Continue”. Manually set the market price of the product at $10.13.Click “Continue”. Select an output of 10,000 units and click “Results”. Fill in yourresults below:Price __________ Profit Margin __________Output __________ Total Profit __________ATC __________ MC __________AVC __________Compute the following results for this scenario. Explain how you got these results, usingformulas and/or computations and/or explanations.Average Fixed Costs ________________________________________Total Fixed Costs ________________________________________Total Variable Costs ________________________________________Total Costs ________________________________________Total Revenue ________________________________________Marginal Revenue ________________________________________Average Revenue ________________________________________Given these results, is this firm in the short run or the long run? __________. How doyou know this? _________________________________________________________________________________________________________________________________.Dr. Bresnock Page 2Competition Module What is the profit-maximizing rule? _______________. Explain: _________________________________________________________________________________________.Now click on “Expert Analysis”. What do the results tell you? Is your output too largeor too small? __________ Why? __________________________________________________________________________________________________________________.Are you producing at the optimal level of output? To obtain the optimal level of profits,the firm should produce at what point? Provide a brief summary below:________________________________________________________________________________________________________________________________________________Next, click on the “Back” button, and then click on “Firm Graph”. Draw a picture of thisgraph below: Does this graph indicate that you are at a profit-maximizing level of output? Why or whynot? Should the firm increase production, decrease production, or stay at the same level?Explain:________________________________________________________________________________________________________________________________________________________________________________________________________________________Now click “New Price”. Select a price of $8.96 and click “Continue”. Select an outputof 8,500 units and click “Results”. Fill in the table below:Price __________ Profit Margin __________Output __________ Total Profit __________ATC __________ MC __________AVC __________Compute the following results for this scenario. Include formulas and computations.Average Fixed Costs _______________ Total Fixed Costs _______________ Total Variable Costs _______________ Total Costs _______________Total Revenue _______________ Marginal Revenue _______________Dr. Bresnock Page 3Competition Module Given these results, is this firm in the short run or the long run? __________. How doyou know this? ___________________________________________________________ Now click on “Expert Analysis”. What do the results tell you? Is your output too largeor too small? __________. Why? __________________________________________.Are you producing at the optimal level of output? To obtain the optimal level of profits,the firm should produce at what point? Provide a brief summary below:_______________________________________________________________________________________________________________________________________________.Next, click on the “Back” button, and then click on “Firm Graph”. Draw a picture of thisgraph below:Does this graph indicate that you are at a profit-maximizing level of output? Why or whynot? Should the firm increase production, decrease production, or stay at the same level?Explain:________________________________________________________________________________________________________________________________________________________________________________________________________________________Continue clicking on “New Output”, entering a desired output, and analyzing yourresults. Summarize your findings on the table below. Keep on tweaking the numbers toattempt to arrive at the optimal level of production. Pretend that you are the manager ofthis firm, and that you are trying to maximize profits. Proceed with as many iterations asneeded. Report the first eight here.Iteration Output Profit Margin__________ __________ ______________________ __________ ______________________ __________ ____________Note that when a perfectly competitive firm sets marginal cost equal to price, it willsucceed in either maximizing profits or minimizing losses in the short run. If this wasyour firm in the short run, would you choose to shut down operations? __________ (Yes,No, Not enough information to decide)Dr. Bresnock Page 4Competition Module In a perfectly competitive market, does the individual firm have the ability to set theprice? __________(Yes, No). By examining the iterations that you performed in the last