Homework Answers
Answer is (b) above marginal cost
The market power allows firms to raise price above marginal costs. This helps increasing the economic profits. This market power is possible because certainly there it is the price maker. However the extent to increase in price depends on the profit maximizing output.
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QUESTION 9 Market power allows a firm to raise price: A. above average cost. B. above...
1l. If a monopolistically competitive firm is incurring losses, then at the profit-max a price is above the average total cost curve. b. price is below the average total cost curve c. price is equal...
1l. If a monopolistically competitive firm is incurring losses, then at the profit-max a price is above the average total cost curve. b. price is below the average total cost curve c. price is equal to marginal revenue. d. price is less than marginal revenue. e. average total cost equals marginal cost. Both competitive and monopolistically competitive firms a. can maximize profit by raising price. b. cannot control or set their own price c. can maximize profit by producing to...
5. (15 points) A firm with market power sells its product for $9/unit, and its marginal cost is M...
5. (15 points) A firm with market power sells its product for $9/unit, and its marginal cost is MC per unit. (7 pts)(a) What is this firm's Lerner Index? $6 (8 pts)(b) Beginning with the way we write marginal revenue in terms of market price, show mathematically how we can obtain the formula for the Lerner Index. Explain what range of values the LI can take, and which value indicates more market power
5. (15 points) A firm with market...
Show work pretty please. 30. Average total cost a. b. c. d. e. increases as output...
Show work pretty please.
30. Average total cost a. b. c. d. e. increases as output increases. decreases as output increases. increases if marginal cost is increasing increases if marginal cost is greater than average total cost. both c and d 31. Amonopolist which suffers losses in the short run will continue to operate as long as total revenue covers fixed cost. raise price in order to eliminate losses exit in the long run if there is no plant size...
QUESTION 22 In a competitive market the price is $8. A typical firm in the market...
QUESTION 22 In a competitive market the price is $8. A typical firm in the market has ATC - S6, AVC - S5, and MC - $8. How much economic profit is the firm earning in the short run? a. $2 per unit b. Si per unit c. $0 per unit Od.$3 per unit QUESTION 23 Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward? a. a technological advance resulting in...
Question 9 (1 point) Normal profits for a competitive firm occur when: Question 9 options: a)...
Question 9 (1 point) Normal profits for a competitive firm occur when: Question 9 options: a) the price equals average total cost. b) the price equals average variable cost. c) marginal cost exceeds marginal revenue. d) marginal revenue exceeds marginal cost.
The average consumer at a firm with market power has an inverse demand function of P...
The average consumer at a firm with market power has an inverse demand function of P = 10 - Q. The firm's marginal cost is 2. If the firm decides to introduce two-part pricing, what should be optimal price to charge a consumer for each unit purchased? A=2 B=8 C=16 D=24
The average consumer at a firm with market power has an inverse demand function of P...
The average consumer at a firm with market power has an inverse demand function of P = 10 - Q. The firm's marginal cost is 2. If the firm decides to introduce two-part pricing, what should be optimal price to charge a consumer for each unit purchased? A. 2 B. 8 C.16 D.24
A profit-maximizing firm with market power will always produce a level of output where a. demand...
A profit-maximizing firm with market power will always produce a level of output where a. demand is elastic. b. demand is inelastic. c. price is greater than average total cost. d. marginal revenue is greater than average total cost.
QUESTION 7 For a perfectly competitive firm, at profit maximization market price exceeds marginal cost. total...
QUESTION 7 For a perfectly competitive firm, at profit maximization market price exceeds marginal cost. total revenue is maximized. marginal revenue equals marginal cost. O production must occur where average cost is minimized.
a firm earns zero economic profit when? A) price is equal to average variable cost B)...
a firm earns zero economic profit when? A) price is equal to average variable cost B) price is equal to average total cost C)price exceeds average total cost by the greatest amount D)marginal revenue is equal to marginal cost
1l. If a monopolistically competitive firm is incurring losses, then at the profit-max a price is above the average total cost curve. b. price is below the average total cost curve c. price is equal to marginal revenue. d. price is less than marginal revenue. e. average total cost equals marginal cost. Both competitive and monopolistically competitive firms a. can maximize profit by raising price. b. cannot control or set their own price c. can maximize profit by producing to...
5. (15 points) A firm with market power sells its product for $9/unit, and its marginal cost is MC per unit. (7 pts)(a) What is this firm's Lerner Index? $6 (8 pts)(b) Beginning with the way we write marginal revenue in terms of market price, show mathematically how we can obtain the formula for the Lerner Index. Explain what range of values the LI can take, and which value indicates more market power
5. (15 points) A firm with market...
Show work pretty please.
30. Average total cost a. b. c. d. e. increases as output increases. decreases as output increases. increases if marginal cost is increasing increases if marginal cost is greater than average total cost. both c and d 31. Amonopolist which suffers losses in the short run will continue to operate as long as total revenue covers fixed cost. raise price in order to eliminate losses exit in the long run if there is no plant size...
QUESTION 22 In a competitive market the price is $8. A typical firm in the market has ATC - S6, AVC - S5, and MC - $8. How much economic profit is the firm earning in the short run? a. $2 per unit b. Si per unit c. $0 per unit Od.$3 per unit QUESTION 23 Which of the following factors is most likely to shift IBM's total cost and marginal cost curves downward? a. a technological advance resulting in...
QUESTION 7 For a perfectly competitive firm, at profit maximization market price exceeds marginal cost. total revenue is maximized. marginal revenue equals marginal cost. O production must occur where average cost is minimized.
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