9. The firm in Exhibit 9-3, a monopolist that maximizes profit by charging all c

Question

9. The firm in Exhibit 9-3, a monopolist that maximizes profit by charging all customers the a price, is making a profit of a. $O b. $234 c. $482 d. $960 e. $468 10. Firms can earn economic profits even in the long run if a. they charge the highest price possible b there is a cost-reducing technological change c. there are significant barriers to entry d. marginal revenue equals marginal cost e. price is less than average variable cost at all rates of output 11. Perfectly competitive firms and monopolist firms both maximize profit where a. price equals marginal cost b. total revenue is maximized c. average total cost is minimized d. marginal cost equals marginal revenue e. price is as high as possible

Explanation / Answer

Answer 10)

c.)

for firms to earn economic profits, in the long run, there must be significant barriers to entry. This will prohibit other new firms from entering thereby limiting the supply available to the consumers.

Answer 11)

d.) Marginal costs is equal to marginal revenue

for any type of competition in any industry MC=MR is the profit maximizing condition.

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