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Which of the following statements is true?

1) The demand curve is an upward-sloping line which relates price and quantity demanded.

2) If a company that faces a downward-sloping demand curve charges the same price to all its customers, there are usually some customers who are paying less than their willingness to pay.

3) The quantity that corresponds to a particular price on the demand curve tells us the number of people who have that price as their willingness to pay.

4) All of the above.

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manhokwe tawanda
manhokwe tawandaLv10
25 Feb 2021

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Related questions

Suppose that De Beers is a single-price monopolist in the marketfor diamonds. De Beers has five potential customers: Raquel,Jackie, Joan, Mia, and Sophia.

Each of these customers will buy at most one diamond—and only ifthe price is just equal to, or lower than, her willingness to pay.Raquel’s willingness to pay is $400; Jackie’s, $300; Joan’s, $200;Mia’s, $100; and Sophia’s, $0.

De Beers’ marginal cost per diamond is $100. The demand schedulefor diamonds is shown in the accompanying table.

Price of Diamond ||| Qty. of Diamonds Demanded
$500................ ||| 0
$400................ ||| 1
$300................ ||| 2
$200................ ||| 3
$100................ ||| 4
$0................... ||| 5
a. Calculate De Beers’ total revenue and its marginalrevenue.

Price of diamond|Qty of diam. demanded|Total Rev.|MarginalRev.
$500...............| 0 ......................|............|--
400................| 1
300................| 2
200................| 3
100................| 4
0...................| 5


From your calculation, draw the demand curve and the marginalrevenue curve. Please see letter "e".....marginal cost curve needsto be added to the graph of this.






b. Explain why De Beers faces a downward-sloping demandcurve.



c. Explain why the marginal revenue from an additional diamond saleis less than the price of the diamond.



d. Suppose De Beers currently charges $200 for its diamonds.
If it lowered the price to $100, how large is the priceeffect?


How large is the quantity effect?


e. Add the marginal cost curve to your diagram from part a.

… and determine which quantity maximizes De Beers’s profit andwhich price De Beers will charge.

Suppose that US Airways aggregate demand curve for seats in this quarter is
Q = 20000-20*P for P < 1000
where P is its price in dollars. Its marginal cost is $100 per passenger.
(i) What is US Airways prot-maximizing price?
(ii) When US Airways sets the prot-maximzing price, what is the value of consumer surplus and
deadweight loss? What is the rms prot?

(b) Lets suppose we write demand in a different way. Marginal cost is still $100. Suppose that there are 20,000 potential passengers on the National-Charlotte market. The willingness to pay of an individual potential passenger is uniformally distributed between $0 and $1000, and a passenger will travel if and only if the price set by US Airways, which has to be the same for all passengers, is less than their willingness to pay.

(i) What will be the quantity of seats sold (i.e., number of travellers) if US Airways sets a price of $100? $550 dollars?

(ii) What is the rms aggregate demand curve (i.e., given an expression like the one above)?

(iii) What would be its aggregate demand curve if valuations (i.e., willingness to pay) were uniformally distributed between $0 and $800? In this case what would be the prot-maximizing price, the consumer surplus, deadweight loss and prot?

(c) It takes about 7.5 hours to drive from DC to Charlotte. For business travellers driving is not an option. Suppose that there are 10,000 potential business travellers with willingness to pay uniformally distributed between $0 and $1000. There are 10,000 potential leisure travellers with willingness to pay to go to Charlotte also uniformally distributed between $0 and $1000, but they will drive if US Airways charges a price of more than $200 (i.e., you can think of the e

As long as profits remain positive, a firm will want to increase the quantity produced.

Question 3 options:

  1) True
  2) False

Question 4 (1 point)

Only variable costs are relevant to a firm's decision to shut down.

Question 4 options:

  1) True
 

2) False

A competitive firm faces a downward-sloping demand for its product.

Question 1 options:

  1) True
 

2) False

If a firm is producing a quantity along the upward sloping portion of its marginal cost curve at which marginal cost exceeds price and is earning positive economic profits, it should

Question 10 options:

 

1)

 continue to produce this quantity.
 

2)

 decrease the quantity produced because doing so will increase profit.
 

3)

 increase the quantity produced because profits are still positive.
 

4)

wait for the price to increase to its current marginal cost.

Ultimately, short-run supply curves are upward sloping because of

Question 12 options:

 

1)

 the irrelevance of fixed costs to the firm's decision making.
 

2)

 the factor-price effect.
 

3)

 diminishing marginal returns to the variable inputs.
 

4)

 the equality of demand and marginal revenue for competitive firms.

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