Per-unit $2 increase in material cost will increase marginal cost (MC) by $2 per unit. Since monopolist equates MR and MC, at new profit-maximizing level MR increases by $2.
However, MR curve lies below demand curve. So $2 increase in MR will increase price by less than $2.
In following graph, initial equilibrium is at point A where MR intersects MC0 with price P0 and output Q0. After cost increases, MC0 shifts up to MC1 and new equilibrium is at point B where MR intersects MC1 with higher price P1 and lower output Q1. Here, (MC1 - MC0) > (P1 - P0).
True-False-Ambiguous and Explain Why 5. Biggie Inc. is a single-price monopoly. If the cost of its...
True False-Ambiguous and Explain why 6. Suppose that a single-price monopolist bought up all the firms in a competitive industry and was able to block new firms from entering. In this case, consumer surplus would fall, a deadweight loss would arise, and the firm would earn positive economic profits. Draw a graph.
True-False-Ambiguous and Explain why 7. The equilibrium price of coal is $50 per ton. Coal generates a negative externality of $20 per ton, but then the negative externality increases to $40 per ton. Therefore, consumer surplus will increase and the deadweight loss will grow. Draw a graph.
True False-Ambiguous and Explain why 2. Carino's, Axe Company operates in a monopolistically competitive market and, like most firms in the industry, has been earning an above-normal profit. Therefore, it is likely to increase its price in the future. Draw a graph.
True False-Ambiguous and Explain Why 3. If total fixed costs are $500 per day, labor is the only variable cost and wages are $100 per worker per day, then the firm with the production data below will shut-down if the price is below $3 per unit. L 0 3 5 6 8 12 Q 0 100 200 300 400 500
True False-Ambiguous and Explain why 8. The equilibrium price of coal is $50 per ton. Coal generates a negative externality of $30 per ton. Therefore, a tax will reduce the deadweight loss and reduce producer surplus.
True False-Ambiguous and Explain why 4. The data demonstrate economies of scale and the law of diminishing returns. L Q 0 0 3 100 5 200 6 300 8 400 12 500
True False-Ambiguous and Explain Why 9. A person whose AIME is $1600 per month will receive a monthly Social Security check that's twice as high as an otherwise identical person whose AIME is $800 per month.
Explain briefly why you think the following statement is true, false, or ambiguous. Competitive currencies would work automatically to provide consumers with protection against inflation.
True or False. State whether the following statements are true or false and explain why the statement is true or false. (2 points each) 5. The greenhouse effect is a man-made phenomenon that is caused by fossil fuel burning. 6. Southern California is a global biodiversity hotspot because of its high alpha diversity. 7. Elevated CO2 exposure will cause a decline in plant tissue nitrogen concentration. 8. Elevated CO2 will cause a greater biomass increase for C3 plants than C4...
True or False: Indicate whether the following questions are true or false and then EXPLAIN why. 1. An increase in price expectations shifts the long-run aggregate supply curve to the left. 2. All explanations for the upward slope of the short-run aggregate supply curve suppose that the quantity of output supplied increases when the actual price level exceeds the price level that was expected. 3. One reason the Aggregate Demand curve slopes downward is the real wealth effect: a decrease...