 2、描述和解释产出与平均成本的关系。

3、这家公司更可能在完全竞争或不完全竞争（如垄断竞争）中运作吗？

4。需求在什么情况下变得缺乏弹性？

5、如果租金上升到每天200美元，咖啡利润最大化的数量是否会改变？

6、如果其他投入（咖啡、牛奶、糖和一次性杯子）的成本上升到每杯3.60美元，咖啡利润最大化的数量是否会改变？

2.Describe and explain the relationship between Output and Average Cost

Output and Average Cost (AC) are usually related by a U-shaped curve. In the descending limb of the curve, as the output increases, the average cost of the firm decreases till it reaches the minima of the function. Post this point, increasing production leads to increase in the average cost of the firm.

When a firm operates in the descending limb of the AC curve, it is said to be in excess capacity whereas when it operates in the ascending limb of the curve, it is said to operate in over-utilization.

The following figure shows the average cost of the above example. For the given outputs, the firm is more likely to operate in excess capacity because the AC curve is declining.

3.Is this firm more likely to be operating in perfect competition or imperfect competition (e.g. monopolistic competition)?

Explain your answer in sentence form

Since the price is not independent of quantity, the firm is more likely to be operating in Monopolistic competition because in perfect competition, price is independent of the quantity sold.

1. At what output does demand become inelastic?

The equation for MR: y=-x+6.5 (x is per 100 units of output)

The equation for MC: y=2.6

The equation for demand is: P = -0.5Q+6 (where Q is per 100 unit of output)

Solving them we get, x=3.9 or 390 units of coffee and corresponding Price will be 4.05.

5.Would the profit maximising quantity of coffee change if the rental cost rises to \$200 per day?

Explain your answer in sentence form

If the fixed cost changes, the short run profit maximizing price and quantity will not change but the profit will be reduced. It happens because the profit maximizing output and price are determined by equalizing Marginal Revenue and Marginal Cost. The fixed cost does not figure into the MC.

6.Would the profit maximising quantity of coffee change if cost of other inputs (coffee, milk, sugar and disposable cups) rises to \$3.60 per cup?

Explain your answer in sentence

The above mentioned change will change the profit maximizing output and price because now, the marginal cost i.e., extra cost incurred by David to produce an extra cup of coffee has increased. Essentially, at the profit maximizing level, the price will increase and the quantity will decrease as shown。