Question

Which of the following statements is accurate?  

Select the correct answer below:

A. when the long-run average cost (LRAC) decreases as output increases, a firm is experiencing diseconomies of scale.

B. when the long-run average cost (LRAC) increases as output increases, a firm is experiencing diseconomies of scale.

C. when the long-run average cost (LRAC) increases as output increases, a firm is experiencing economies of scale.

D. when the long-run average cost (LRAC) decreases as output increases, a firm is experiencing constant returnsof scale.

The perceived demand curve for the _______________ is _______________.

Select the correct answer below:

A. perfectly competitive firm; also the market demand curve

B. perfectly competitive firm; downward sloping

C. monopolist; upward sloping

D. monopolist; also the market demand curve

What is the total profit for this monopolist? Enter the exact value for your answer You may use this formula when solving the question: Profit Total Revenue Total Cost $220 MC $200 $180 + + + | トーーー-| $160 $140 $120 S$100 O $80 $60 $40 $20 AC Demand MR 2 4 Quantity Provide your answer below:

Answer 1

1) B. when the long-run average cost (LRAC) increases as output increases, a firm is experiencing diseconomies of scale When the long run costs start increasing with an increase in output then the firm experiences diseconomies of scale.

2)The perceived demand curve for the _______________ is _______________.

D. monopolist; also the market demand curve

As the monopolist is the sole producer of the good so the market demand is the firms demand curve.

3) Set MC=MR for profit-maximizing quantity and price

P=120, Q=4, AC=40

Profit = TR-TC

=120*4 - 40*4

=480-160

=320