Assume there is a decrease in the market demand for a good sold by price-taking firms...
Assume there is a decrease in the market demand for a good sold by price-taking firms that are initially producing the profit-maximizing level of output. For the individual firm, this would result in:
Question 10 options:
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a decrease in both price and the profit-maximizing quantity of output. |
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a decrease in price and increase in the profit-maximizing quantity of output. |
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an increase in both price and the profit-maximizing quantity of output. |
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an increase in price and decrease in the profit-maximizing quantity of output |
Homework Answers
a) When the market demand falls, price of the good falls and quantity demanded falls.Since price equals marginal revenue for a price taking firm, the profit falls.
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Assume there is a decrease in the market demand for a good sold
by price-taking firms...
The industry price elasticity of demand for good X is −1.5. The price elasticity of demand for the output of an individu...
The industry price elasticity of demand for good X is −1.5. The price elasticity of demand for the output of an individual firm producing good X in this industry −9. From this we can conclude that: individual firms have significant market power. the HHI for this industry is 1,667. this industry is highly concentrated. None of the options. individual firms have little market power.
1. Let the market demand curve be P=1000 - 10Q. Assume the market is controlled by...
1. Let the market demand curve be P=1000 - 10Q. Assume the market is controlled by a monopolist. Let fixed cost be $10,000 and Marginal Costs (MC)=20Q. a) What is the profit maximizing output? b) What is the monopolist's total revenue at the profit maximizing output? c) How much profit is the monopolist earning? d) Assume the government breaks up the monopolist in order to create a perfectly competitive market of identical firms. Assume the MC curve is now the...
Problem 1: Suppose that the market demand function is given by q-80-2p. All firms in the...
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Firm A and Firm B compete in the sale of a product with market inverse demand...
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A market is in long-run equilibrium and firms in this market have identical cost structures. Suppose demand in this market decreases. Which of the following are correct descriptions of what happens to the individual firms and the whole market as the market first leaves and then returns to long-run equilibrium? Instructions: You may select more than one answer. Click the box with a check mark for correct answers and click to empty the box for the wrong answers. 3 Market...
The demand curve for a perfectly competitive firm options: is upward sloping. is perfectly horizontal. is...
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Firm A and Firm B compete in the sale of a product with market inverse demand...
Firm A and Firm B compete in the sale of a product with market inverse demand given by P(Q) = 260-Q, where Q is market output, and Q = 9A + 9B (9A = Firm A's output, 9B = Firm B's output). Firm A's Total Cost function is given by TCA9A) = 209A and Firm B's is given by TCB(9B) = 209B. 15. (20 points) Find the value of Q when Firms A and B Cournot compete to maximize profits...
1) The law of demand indicates that as the price of a good decrease, the quantity...
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2) (4pts.) The own price elasticity of a good sold by a firm, when the price...
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