Price and cost (dollars per pound of steak) 20.00 8.00 16.00 MC 14.00.. 12.00 10

Question

Price and cost (dollars per pound of steak) 20.00 8.00 16.00 MC 14.00.. 12.00 10.00 8.00 6.00... 4.00.. 2.00 MR 0 1,000 2,000 3,000 4,000 5,000 Quantity (pounds of steaks per hour) Suppose the grocery store market in Kansas City is perfectly competitive. Then one store buys all the others and becomes a single- price monopoly. The figure above shows the relevant demand and cost curves. When the market is perfectly competitive, the price of a pound of steak is_ and when it is a monopoly, the price of a pound of O $4: $8 $4: $20 O $4; $12 O $8; $12

Explanation / Answer

The answer to the first blank is $8 and the answer to the second blank is $12. Therefore fourth option is correct

Under a perfectly competitive structure the price is determined at the point where the demand curve intersects with the marginal cost curve. In the diagram we can see that this occurs when the price is $8. For a monopoly the price is determined by the quantity line which is found where marginal revenue and marginal cost intersect. This gives a quantity of 2000 and a price of $12.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.