. Now assume that firm T faces a downward-sloping (straight-line) demand curve. (a) Fill in the columns for TR and MR in the table below. (Note that the figures for MR are ente between 0 and 1, 1 and 2, 2 and 3, etc.) The demand curve for the product of firm T
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(b) What is the
(c) Over what price range is demand price elastic and Over what price range is demand price inelastic? ....................................................................................
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- 29. Refer to Figure 15-5 (attached). At the profit-maximizing level of output, marginal revenue is equal to P3. marginal cost is equal to P3. average revenue is equal to P2. average total cost is equal to P6.Now assume that firm T faces a downward-sloping (straight-line) demand Fill in the columns for TR and MR in the table (Note that the figures for MR are entered between 0 and 1, 1 and 2, 2 and 3, etc.) The demand curve for the product of firm T Price (AR) (£) Quantity (Units) Total Revenue (TR) (£) Marginal Revenue (MR) (£) 20 18 16 14 12 10 8 6 0 1 2 3 4 5 6 7 ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… ……… (b) What is the price elasticity of demand at P = £10?.................................................................... (c) Over what price range is demand price elastic?......................................................................... (d) Over what price range is demand price inelastic? ....................................................................................3. Suppose that a firm faces a demand curve that has a constant elasticity of 2. This demand curve is given by q = 256=P2. Suppose also that the Örm has a marginal cost curve of the form MC = 0:001q. a) Graph these demand and marginal cost curves. b) Calculate the marginal revenue curve associated with the demand curve; graph the curve. c) At what output level does marginal revenue equal marginal cost?
- Use the following demand schedule to determine total revenue and marginal revenue for each possible level of sales: “Marginal revenue is the change in total revenue associated with additional units of output.” Explain verbally and graphically, using the data in the table.Suppose the following data represent the market demand for catfish: Price (per unit) $20 19 18 17 16 15 14 13 12 11Quantity demanded (units per day) 12 13 14 15 16 17 18 19 20 21Total revenue — — — — — — — — — —Marginal revenue — — — — — — — — — —Compute total and marginal revenue to complete the table above. At what rate of output is total revenue maximized? At what rate of output is MR less than price? At what rate of output does MR first become negative? Graph the demand and MR curves.35) Refer to Figure 9.2. In which of the following price ranges will the firm continue to operate but at a loss?A) $5-$6 B) $6-$7 C) $7-$8 D) $8-$9 36) Refer to Figure 9.2. Suppose demand for wheat is initially D2. If the price of rice (a substitute for wheat) falls,then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat, and individualprofit-maximizing firms will produce ________ bushels of wheat.A) D1; increase; 13 B) D3; decrease; 10 C) D3; increase; 15 D) D1; decrease; 0 37) Refer to Figure 9.2. If demand for wheat is D3, then a profit-maximizing firm will produce ________ units andearn ________.A) 12; negative profits B) 15; positive profitsC) 9; positive profits D) 13; exactly a normal return 38) Refer to Figure 9.2. If demand for wheat is D1, then in the long runA) firms will increase their output so that their average fixed cost per unit falls.B) the firm will increase its price and output.C) the firm will exit the industry.D) new firms…
- 1- Suppose that the total cost function of a firm is given as follows;TC = 500 + 2Q2And the price of the firm’s product is determined by the market equilibrium at $100.a- Set the profit maximizing condition . Find the profit maximizing output level for this firm .b- What is the total revenue ?c- What is the total cost ?d- What is the profit earned by the firm ?e- Illustrate your answer by using a well-labeled graph .f- Denote the break even price level with Pb on the same graph .g- Denote the shut down price level with Ps on the same graph.h- Show the firm’s supply curve on the same graph .i- Does the firm function in short-run or long-run ? Why ?1- Refer to Figure 9-1. If the price a perfectly competitive firm is facing in the market is P2, then theprofit-maximizing firm in the short run should produce outputA) B. B) C. C) D. D) E. E) F 2- Suppose a perfectly competitive firm is producing where its average revenue is less than its lowestaverage variable cost. The firm shouldA) shut down.B) increase the market price.C) reduce its output.D) expand its output.E) not change its output.Use the following demand schedule to determine total revenue and marginal revenue for each possible level of sales: a. What can you conclude about the structure of the industry in which this firm is operating? Explain. b. Graph the demand, total-revenue, and marginal-revenue curves for this firm. c. Why do the demand and marginal-revenue curves coincide? d. “Marginal revenue is the change in total revenue associated with additional units of output.” Explain verbally and graphically, using the data in the table.
- 1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: 2) A firm that is motivated by self interest should 3) If price is above the equilibrium level, competition among sellers to reduce the resulting 4) Camille's Creations and Julia's Jewels both sell beads in a competitive market. If at the market price of $5, both are running out of beads to sell (they can't keep up with the quantity demanded at that price), then we would expect both Camille's and Julia's to 5) Since their introduction, prices of DVD players have fallen and the quantity purchased has increased. This statement 6) In a market economy the distribution of output will be determined primarily by 7) In a competitive market economy firms will select the least-cost production technique because 8) Suppose that the price of peanuts falls from $3 to $2 per bushel and that, as a result, the total revenue received by peanut…c) Assume that the market price for bagel services is 42 and store produces 30 units of the bagel. Calculate theprofit level. Is the store profit maximizing? Explain your answer. d) Go back to part c) and assume that there are 100 identical bagel store in the market. Determine the market supply curve. (You will obtain total market quantity, Q, as a function of price,P). Are elasticities of individual firm supply and market supply curves different? e) Given the market supply curve you have calculated in part d), now assume that market demand forhairdressers are given by Q=2900-50P. Find the equilibrium price and quantity in the market. Does the marketequilibrium correspond to long-run equilibrium? Explain17.A perfectly competitive firm has the following total cost function: TC = 4,500 + 2q + .0005q2 where TC is total cost in dollars and q is the quantity of output produced. a. Assume this perfectly competitive market consists of 800 firms with cost structures identical to the one above. What is the equation for the market supply curve? Assume the market demand curve is: Qd = 5,600,000 – 400,000P where Qd is the quantity demanded in the market and P is the commodity’s price in dollars. b. What is the market’s equilibrium price? c. Assuming the market is in equilibrium, using marginal revenue and marginal cost determine the firm’s profit-maximizing quantity of output? What does the profit-maximizing firm’s total economic profit equal? Assume the total cost function above: TC = 4,500 + 2q + .0005q2 is associated with the short-run total cost function that corresponds to the minimum point on the long-run average total cost curve and this is a constant cost industry. d. What would the…
