Homework Answers
Answer. Option B is correct.
This is because a monopoly firm maximize the profit at MR=MC. Given the MC of firm is 0, it should produce the level of output where MR is also zero. However, it is given that demand is inelastic which means MR is negative. So, firm should reduce the output to produce at point where MR and MC are zero.
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Say a monopolist knew that at the current price for its product demand is inelastic. If...
please explain the answers 89. If a monopolist were to produce in the inelastic segment of...
please explain the answers
89. If a monopolist were to produce in the inelastic segment of its demand curve A. total revenue would be at a maximum. B. marginal revenue would be negative. C. the firm would be maximizing profits. D. it would necessarily incur a loss. 91. Assume a monopolist is charging price and selling output Q as shown on the diagram. On the basis of this information we can say that: Dollars MR 0 Quantity A. if marginal...
1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13,...
1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13, ATC = $15, and MC = $14. In order to maximize profits, this monopolist should A) shut down B) decrease production and increase price. C) not change his output level, because he is currently at the profit-maximizing output level. D) increase production and reduce price. E) there is insufficient information to make a recommendation 2) 2) Consider a monopolist that is able to distinguish...
A monopolist faces a market demand curve given by
A monopolist faces a market demand curve given by Q=70-P a. If the monopolist can produce at constant average and marginal costs ofAC-MC-6, what output level will the monopolist choose to maximize profits? What is the price at this output level? What are the monopolist's profits? b. Assume instead that the monopolist has a cost structure where total costs are described by C(Q) = 0.25Q2 - 5Q + 300. With the monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now...
Figure 01. Cost and Demand for a Monopolistic Competitor Price $15.00 --- $10.00 --- — АС MC Imre 11 Demand curve...
Figure 01. Cost and Demand for a Monopolistic Competitor Price $15.00 --- $10.00 --- — АС MC Imre 11 Demand curve facing each firm, de 324250 Quantity Question 02. Using Figure 01, the total cost of producing the profit-maximizing output for each firm is: A. $320. B. $480 C. $420 D. $500 Question 03. Using Figure 01, the profits at the profit-maximizing output for each firm is: A. $320. B. $480 C. $160. D. $420. Question 04. Suppose that at...
a. A monopolist finds that at its current level of output the marginal cost of production...
a. A monopolist finds that at its current level of output the marginal cost of production is $9, the average total cost is $9.95,the average variable cost is $9.75 and its marginal revenue is $9.45. What would you recommend that the monopolist do to increase profits? One word answer is not enough. Explain. b. A monopolist determines that at the current level of output the marginal revenue is $9.00 and its marginal cost is $10. What should the monopolist do to...
A monopolist faces the following average revenue (demand) curve:
Problem 1. (7 points) A monopolist faces the following average revenue (demand) curve: P = 300-0.3Q and the monopolist's cost function is given by C(Q) = 8000+0.3Q2 (a) Derive the monopolist's marginal revenue equation. (2 pts) (b) Derive the monopolist's marginal cost equation. (1 pt) (c) What level of output will the monopolist choose in order to maximize its profits? (2 pts) (d) What price will the monopolist receive at the profit-maximizing level of output? (1 pt) (e) Calculate the monopolist's profit when they produce at the profit-maximizing level....
Below are two different cases. In each case, the monopolist wants to maximize its profits or...
Below are two different cases. In each case, the monopolist wants to maximize its profits or minimize its losses. Analyze each case and give a recommendation as to what the monopolist should do based on the possible recommendations provided below. Explain how you reached this recommendation and the reasons for it. Possible Recommendations: a. Increase production and reduce the price. b. Decrease production and raise the price. c. Shut down. d. The monopoly is currently at the correct position. CASE...
Below are two different cases. In each case, the monopolist wants to maximize its profits or...
Below are two different cases. In each case, the monopolist wants to maximize its profits or minimize its losses. Analyze each case and give a recommendation as to what the monopolist should do based on the possible recommendations provided below. Explain how you reached this recommendation and the reasons for it. Possible Recommendations: a. Increase production and reduce the price. b. Decrease production and raise the price. c. Shut down. d. The monopoly is currently at the correct position. CASE...
1 5. A monopolist faces the following demand schedule for the good that is its product. (15 points) Quantity Price...
1 5. A monopolist faces the following demand schedule for the good that is its product. (15 points) Quantity Price Total Revenue Marginal Revenue $500.00 $450.00 $400.00 $350.00 $300.00 $250.00 $200.00 $150.00 $100.00 $40.00 10 a. Compute the firm's Total Revenue for each quantity. b. Compute the firm's Marginal Revenue for each quantity. c. If fixed costs are $200 and marginal cost is constant at $40 per item what quantity will the firm produce to maximize profit? d. What price...
If a firm in a perfectly competitive market raises the price of its product above the...
If a firm in a perfectly competitive market raises the price of its product above the equilibrium price, it will: Decrease profits because demand is relatively elastic. Increase profits but only if it is facing inelastic demand. Decrease sales to zero. Entice other firms into the market because it is making positive economic profits.
please explain the answers
89. If a monopolist were to produce in the inelastic segment of its demand curve A. total revenue would be at a maximum. B. marginal revenue would be negative. C. the firm would be maximizing profits. D. it would necessarily incur a loss. 91. Assume a monopolist is charging price and selling output Q as shown on the diagram. On the basis of this information we can say that: Dollars MR 0 Quantity A. if marginal...
1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13, ATC = $15, and MC = $14. In order to maximize profits, this monopolist should A) shut down B) decrease production and increase price. C) not change his output level, because he is currently at the profit-maximizing output level. D) increase production and reduce price. E) there is insufficient information to make a recommendation 2) 2) Consider a monopolist that is able to distinguish...
Figure 01. Cost and Demand for a Monopolistic Competitor Price $15.00 --- $10.00 --- — АС MC Imre 11 Demand curve facing each firm, de 324250 Quantity Question 02. Using Figure 01, the total cost of producing the profit-maximizing output for each firm is: A. $320. B. $480 C. $420 D. $500 Question 03. Using Figure 01, the profits at the profit-maximizing output for each firm is: A. $320. B. $480 C. $160. D. $420. Question 04. Suppose that at...
1 5. A monopolist faces the following demand schedule for the good that is its product. (15 points) Quantity Price Total Revenue Marginal Revenue $500.00 $450.00 $400.00 $350.00 $300.00 $250.00 $200.00 $150.00 $100.00 $40.00 10 a. Compute the firm's Total Revenue for each quantity. b. Compute the firm's Marginal Revenue for each quantity. c. If fixed costs are $200 and marginal cost is constant at $40 per item what quantity will the firm produce to maximize profit? d. What price...
If a firm in a perfectly competitive market raises the price of its product above the equilibrium price, it will: Decrease profits because demand is relatively elastic. Increase profits but only if it is facing inelastic demand. Decrease sales to zero. Entice other firms into the market because it is making positive economic profits.
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