Homework Answers
Answer : Option A is correct. The market will be perfectly competitive in the long run because it helps that there is alloctative efficiency in the long run scenario time period as in order to earn maximum profit in the long run time period.
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In a concentrated market where every producer faces a downsloping demand curve for his product, the...
Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve.
3. Is monopolistic competition efficient? Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with...
In a perfectly competitive market, the price that the firm faces from supply and demand is...
In a perfectly competitive market, the price that the firm faces from supply and demand is also equal to: a. average variable cost. b. marginal revenue and average revenue. c. average revenue but never marginal revenue. d. long run average cost in the short run.
A monopolist faces a demand curve P = 210 - 3Q and faces a constant marginal cost MC = 15.
A monopolist faces a demand curve P = 210 - 3Q and faces a constant marginal cost MC = 15. a) Calculate the profit-maximizing monopoly quantity and compute the monopolist's total revenue at the optimal price. d) Suppose that this monopoly opens for competition and the market becomes perfectly competitive. The firms face constant marginal cost MC = 15. Find the long-run perfectly competitive industry price and quantity.
Consider a situation where a monopolist faces the following inverse market demand curve p= 100 –...
Consider a situation where a monopolist faces the following inverse market demand curve p= 100 – 4 and the following cost function TC = 4q+72 a) Derive the marginal revenue and marginal cost functions. b) What are the equilibrium price and quantity if this market behaved as if it were perfectly competitive? c) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under perfect com- petition. d) What are the equilibrium price and quantity when the monopolist produces as a...
Assume a monopolist faces a market demand curve P = 240 – 1⁄2Q and has the...
Assume a monopolist faces a market demand curve P = 240 – 1⁄2Q and has the short-run total cost function C = Q2. a. What is the profit-maximizing level of output and price? b. What are profits? c. What would price and output be if the firm priced at the socially efficient (competitive) level? d. What is the magnitude of the deadweight loss caused by monopoly pricing?
3. Monopoly Consider a situation where a monopolist faces the following inverse market demand curve 132...
3. Monopoly Consider a situation where a monopolist faces the following inverse market demand curve 132 - 2a p and the following cost function TС — 12g + 2q* a) Derive the marginal revenue and marginal cost functions b) What are the equilibrium price and quantity if this market behaved as if it were competitive? c) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under perfect petition d) What are the equilibrium price and quantity when the monopolist produces...
A monopolistically competitive firm faces the following demand curve for its product: 6 Price ($) Quantity...
A monopolistically competitive
firm faces the following demand curve for its product: 6 Price ($)
Quantity 10 2 9 4 8 6 7 8 5 12 4 14 3 16 2 18 1 20 10 Refer to the
Table. The firm has total fixed costs of $20 and a constant
marginal cost of $5 per unit. What will the firm do? a) It will
produce 2 units; firms will exit the market in the long run. b) It
will produce...
5. A monopolist faces a demand curve P = 60 – 2Q and initially faces a...
5. A monopolist faces a demand curve P = 60 – 2Q and initially faces a constant marginal cost MC = 4. (a) Calculate the profit-maximizing monopoly quantity and price, and compute the monopolist's total rev- enue and profits at the optimal price. (b) Suppose that the monopolist's marginal cost in- creases to MC = 8. Verify that the monopolist's total revenue goes down. (c) Suppose that all firms in a perfectly competitive equilibrium had a constant marginal cost MC...
In market A, a firm with market power faces an inverse demand curve of P =...
In market A, a firm with market power faces an inverse demand curve of P = 10 – Q and a marginal cost that is constant at $2. In market B, a firm with market power faces an inverse demand curve of P = 8 – 0.75Q and a marginal cost of $2. Producer surplus in market A is _____ than in market B. $4 higher=correct how?
Suppose that a firm produces wooden train engines in a monopolistically competitive market. The following graph...
Suppose that a firm produces wooden train engines in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. Because this...
Consider a situation where a monopolist faces the following inverse market demand curve p= 100 – 4 and the following cost function TC = 4q+72 a) Derive the marginal revenue and marginal cost functions. b) What are the equilibrium price and quantity if this market behaved as if it were perfectly competitive? c) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under perfect com- petition. d) What are the equilibrium price and quantity when the monopolist produces as a...
3. Monopoly Consider a situation where a monopolist faces the following inverse market demand curve 132 - 2a p and the following cost function TС — 12g + 2q* a) Derive the marginal revenue and marginal cost functions b) What are the equilibrium price and quantity if this market behaved as if it were competitive? c) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under perfect petition d) What are the equilibrium price and quantity when the monopolist produces...
A monopolistically competitive
firm faces the following demand curve for its product: 6 Price ($)
Quantity 10 2 9 4 8 6 7 8 5 12 4 14 3 16 2 18 1 20 10 Refer to the
Table. The firm has total fixed costs of $20 and a constant
marginal cost of $5 per unit. What will the firm do? a) It will
produce 2 units; firms will exit the market in the long run. b) It
will produce...
5. A monopolist faces a demand curve P = 60 – 2Q and initially faces a constant marginal cost MC = 4. (a) Calculate the profit-maximizing monopoly quantity and price, and compute the monopolist's total rev- enue and profits at the optimal price. (b) Suppose that the monopolist's marginal cost in- creases to MC = 8. Verify that the monopolist's total revenue goes down. (c) Suppose that all firms in a perfectly competitive equilibrium had a constant marginal cost MC...
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