ECON 101 Study Guide - Final Guide: Average Variable Cost, Deadweight Loss, Marginal Revenue

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ECON 101 Full Course Notes

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Test review: for a pro t-maximizing rm in a perfectly competitive market, the marginal revenue from each unit produced and sold will be equal to the market price. True: the decision to shut down when the price is less than average variable cost at the pro t- maximizing quantity in the short-run only applies to price taking rms. False: consider the market for a particular good. False: a single-price monopolist faces a downward sloping market demand curve. As a result, if the monopolist is producing a positive number of units, then the marginal revenue from an additional unit of output will be less than the price. True: if a pro t maximizing rm is able to successfully practice perfect price discrimination then both total consumer surplus and deadweight loss in the market will be equal to zero.

Related Questions

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

a. Average Revenue (AR) is less than the price of the product.

b. Average Revenue (AR) is less than Marginal Revenue (MR).

c. Marginal Revenue (MR) is less than the price of the product.

d. Marginal Revenue (MR) is greater than the price of the product.

amethystyellowjacket389

Suppose that a monopolist farm's demand curve is given by p=210-4y and it faces a constant marginal cost of $10. Answer the following questions:

a) what is the profit maximization output for this monopolist? how much total revenue does it earn at this profit maximization level of the output?

b) Suppose that the marginal cost increases to $20. How does total revenue change?

c) Now consider a perfectly competitive industry with a constant marginal cost of $10 for each rm. Find the optimal level of market output and the corresponding price in this industry.

d) Suppose that the marginal cost of each rm in this perfectly competitive industry increases to $20. How does total industry revenue change?

e) Compare and discuss your answers to parts (b) and (d).

bronzechinchilla897

A monopolist faces the following demand curve: P = 120 - .02Q . The rms cost function is given by C = 60Q + 25,000: Assume that the rm maximizes profits.

(a) What is the level of production, price, and total profit per week?

(b) What will be the level of production and price if the market was perfectly competitive?

(d) If the government decides to levy a tax of $14 per unit on this product, what will be the

new level of production, price, and government tax revenue?

(Hint: Suppose initially that consumers must pay the tax to the government.)

emeralddonkey695

ECON 101 Study Guide - Final Guide: Average Variable Cost, Deadweight Loss, Marginal Revenue

ECON 101 Full Course Notes

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