Those with marginal values in excess of 2.00 had a consumer surplus. Those with marginal values below 2.00 did not buy the product (did not engage in a transaction). The sellers had marginal values ranging from 0.75 to 3.25. Those with marginal costs below 2.00 had a producer surplus. Those with marginal costs above 2.00 did not sell their product. Answers to Problems and Exercises (Short-Run Profit Maximization) A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firms product is 150. Output FC VC TC TR Profit/Loss 0 100 0 ___ ___ ___ 1 100 100 ___ ___ ___ 2 100 180 ___ ___ ___ 3 100 300 ___ ___ ___ 4 100 440 ___ ___ ___ 5 100 600 ___ ___ ___ 6 100 780 ___ ___ ___ a. Complete the table. b. At what output rate does the firm maximize profit or minimize loss c. What is the firms marginal revenue at each positive level of output Its average revenue d. What can you say about the relationship between marginal revenue and marginal cost for output rates below the profit-maximizing (or loss-minimizing) rate For output rates above the profit-maximizing (or loss-minimizing) rate a. Output FC VC TC TR Profit/Loss 0 100 0 100 0 100 1 100 100 200 150 50 2 100 180 280 300 20 3 100