(1) (2) (3) (4) (5) (6) (7) Output (Q) Price per Unit (P) Total Revenue (TR) Mar
ID: 1163926 • Letter: #
Question
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Output (Q)
Price per Unit
(P)
Total Revenue (TR)
Marginal Revenue (MR)
Total Cost (TC)
Average Total Cost (ATC)
Marginal Cost (MC)
0
$10
$8
1
9
11
2
8
12
3
7
15
4
6
24
5
5
35
6
4
48
Does this data represent the revenues and costs of a perfect competitive firm or a firm with some degree of “monopoly power”? ______________________
How do you know? ________________________________________________
Fill in the blanks in the table above.
How much output should this firm produce to maximize it’s profit? _____units. What price should this firm charge for its product? $_____ per unit.
This choice of output and price will lead to an economic profit = $______
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Output (Q)
Price per Unit
(P)
Total Revenue (TR)
Marginal Revenue (MR)
Total Cost (TC)
Average Total Cost (ATC)
Marginal Cost (MC)
0
$10
$8
1
9
11
2
8
12
3
7
15
4
6
24
5
5
35
6
4
48
Explanation / Answer
The data represent the revenues and costs of a firm with some degree of “monopoly power”. Because when the firm reduces price, it sales more. The demand curve is downward sloping.
Answer to blank 1: 3 units
Answer to blank 2: $7
Answer to blank 3: $6
Explanation:
From the above table it is clear that profit is maximized at 3 units oo output and the firm charges a price of $7 and earns an economic profit of $6.
All calculations are done in the table.
Q P TR = P*Q MR = ?TR/?Q TC ATC = TC/Q MC = ?TC/?Q PROFIT = TR-TC 0 10 0 8 -8 1 9 9 9 11 11 3 -2 2 8 16 7 12 6 1 4 3 7 21 5 15 5 3 6 4 6 24 3 24 6 9 0 5 5 25 1 35 7 11 -10 6 4 24 -1 48 8 13 -24Related Questions
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