15. (5 points) You are a consultant for five monopolistic firms in different ind
ID: 1218002 • Letter: 1
Question
15. (5 points) You are a consultant for five monopolistic firms in different industries. These clients seek your advice. Using the following information decide whether the firm should:
Remain at the current level of output
Increase output
Decrease output
Shut Down
Recalculate figures
Price
Quantity demanded
Quantity Supplied
11
300
600
9
500
500
7
800
400
5
1200
300
3
1800
200
Firm
P
MR
MC
ATC
AVC
A
10
5.50
5.00
4.50
B
8
6.00
6.00
5.00
3.00
C
12
7.50
8.00
7.00
6.00
D
12
14.00
12.00
5.00
4.00
E
25
15.00
15.00
28.00
26.00
Price
Quantity demanded
Quantity Supplied
11
300
600
9
500
500
7
800
400
5
1200
300
3
1800
200
Explanation / Answer
For a monopolistic competitive firm profit maximization should occur where MC=MR
Firm 1 should decrease output
Firm 2 should remain at the current level of output
Firm 3 should increase output
Firm 4 should increase output
Firm 5 should remain at the current level of output
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