Homework Answers
Question 9
Without regulation, in order to maximize profit, company will produce that level of output corresponding to which MR curve intersects MC curve.
The MR curve is intersecting the MC curve corresponding to output of 1,000 cable subscribers.
The price (as per the demand curve) corresponding to 1,000 cable subscribers is $16.
Thus, the unregulated price is $16.
Now, if government regulates the company and fix prices so that company could earn only normal return then price will be fixed corresponding to the intersection point of ATC curve and demand curve.
The price corresponding to this intersection point is $13.
Thus, the regulated price is $13.
Thus,
The price would be set $3 lower than if company was not regulated.
Hence, the correct answer is the option (c) [$3 lower].
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Consider the first graph (the one capturing electricity use) and
answer each of the following six questions worth two points each.
Identify the areas by letters at the corner points (3 letters for a
triangle, 4 for a rectangle, etc).
a) If this were a
perfectly competitive firm Consumer Surplus = area
________________
b) If this were a
perfectly competitive firm Producer Surplus =
area ________________
c) If this
were a perfectly competitive firm Deadweigh Loss =
area ________________
d) If this were a
single price...
(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in...
(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—market A and market B—the price the monopolist should charge in market A to maximize profits is dollars while a price of dollars should be set in market B. Additionally, profit the monopolist earns by setting these prices in the segmented markets is dollars. Now assume arbitrage begins to become extensive within these two markets. The monopolist will then set one price...
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Question 32 (1 point) Refer to the information provided in Figure 8.9 below to answer the...
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Refer to the inforimation provided in Figure 129 below to ansroer the questions that fotloru 500 600 800 1,200 Q Megawatts of electricity produced by Ohio Edison Figute 12.9 Refer to Figure 12.9. From society's point of view the efficient level of electricity production are -megawatts A) 500 B)600 C) 800 D) 1200
Consider the first graph (the one capturing electricity use) and
answer each of the following six questions worth two points each.
Identify the areas by letters at the corner points (3 letters for a
triangle, 4 for a rectangle, etc).
a) If this were a
perfectly competitive firm Consumer Surplus = area
________________
b) If this were a
perfectly competitive firm Producer Surplus =
area ________________
c) If this
were a perfectly competitive firm Deadweigh Loss =
area ________________
d) If this were a
single price...
(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets—market A and market B—the price the monopolist should charge in market A to maximize profits is dollars while a price of dollars should be set in market B. Additionally, profit the monopolist earns by setting these prices in the segmented markets is dollars. Now assume arbitrage begins to become extensive within these two markets. The monopolist will then set one price...
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Question 5 Refer to the information provided in Figure 9.1 below to answer the question that follows. Cost and demand conditions MC d = MR Price per bushel 0 3 6 9 12 16 17 9 Bushels of wheat This farmer would be breaking even if price was $10 $11.
Question 32 (1 point) Refer to the information provided in Figure 8.9 below to answer the questions that follow. MC 24 ATC P = MR Price 4 0 100 700 350 500 Bales of hay Figure 8.9 Refer to Figure 8.9. if the price jay falls to 18, to maximize profits, the firm should. O produce 700 to minimize fixed costs O produce 350 and break even- reduce production to 500 shut down to avoid losses
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QUESTION 11 Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. MC, MC Dollars Units of labor Figure 10.2 __the amount of Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC 1 to MCO A profit-maximizing firm should output produced and —_ its demand for labor. o keep constant, increase decrease; decrease increase; increase increase; decrease
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