1.Assume that a Firm\'s marginal cost function is MC =3q and its marginal revenu
ID: 1164716 • Letter: 1
Question
1.Assume that a Firm's marginal cost function is MC =3q and its marginal revenue function is MR =120-3q. At the output level of 18 units, in order to maximizae profit, this firm should.
a. increasae its output by 2 units.
b. decreasae its output by 2 units.
c.decreasae its output until MR=MC
d.increasae its output by 4 units.
2. A decline in the number of firms that produce pianos will lead to
a. a decrease in the quantity supplied of pianos.
b. a rightward shift of the supply curve for pianos.
c. a decrease in the quantity demanded for pianos.
d. a leftward shift of the supply curve for pianos
Explanation / Answer
Ans1) the correct option is A. increasae its output by 2 units.
at profit maximisation MR = MC
120 - 3q = 3q implies q = 20. So at output level 18 units, there should be increase in output by 2 units.
Ans2) The correct option is d. a leftward shift of the supply curve for pianos. If there were decline in the number of firms producing pianos them there will be less production of pianos and the supply curve will shift to its left.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.