Study for Final Essay

d) Break even sales change that would change the profits by the same amount as a reduction in price.

To determine the profit maximization quantity, marginal cost equals marginal revenue (MR=MC) will be used. The main office sets minimum pricing for the franchisee to base their prices off. In the short run, the company can maximize profit at which MR=MC. In the long run the franchisee will have to look at price equaling the average total cost (P=ATC) because the price will exceed ATC resulting in an economic profit. The downfall is the profit will entice new companies to enter into the industry, such as Starbucks. Total profits increase when marginal profit is

My questions are whether taxes levied on sellers and taxes levied on buyers are always equivalent? Another is whether

15. In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is ( )

d. Calculate the price elasticity of demand in each market and discuss these in relation to the prices to be charged in each market.

The point of profit maximization for the firm in the given scenario occurs at a quantity of 8 units. At this point they have maximized their profit and as you can see to go beyond this point would cause the firm to incur economic losses.

So, to summarize with all the information given, Company A should always strive to have their marginal cost be equal to their marginal cost in order to maximize profit. If they see that their marginal revenue is higher than the marginal cost then more output needs to be produced to get their max profit. In contract, if the marginal cost if higher than the marginal revenue then output needs to

e.   Firms that are price makers…/a monopoly is a price maker as it holds a large amount of power over the price it charges.

At point F a monopoly firm attains equilibrium producing OM, output at OP, price. OP competitive price is less than OP, (OP < OP,) and OM competitive output is greater than OM, output (OM > OM,).

8. Compared to a perfectly competitive industry with the same demand and cost curves, a monopoly’s price and output will be which of the following?

Refer to Table 18-2. This table describes the number of baseballs a manufacturer can produce per day with different quantities of labor. Each baseball sells for $5 in a competitive market. For which level of employment is the marginal product of labor greatest?

c) Tax Rate: Use of a tax rate derived from the summation of state and statutory taxes instead of the firm's marginal tax rate

PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit

Evaluate each of the following changes in supply and/or demand. How will each affect equilibrium price and quantity in a competitive market? Will price and quantity rise, fall, or be unchanged? Based on shifts, will the answers be indeterminate?

Under VAT law, first, the dealer pays tax on the sale or purchase of goods. The subsequent dealer pays tax on the portion of the value added upon such goods. Thus, the tax burden is shared equally by the last dealer. To illustrate the whole procedure of VAT, an example is as follows: