Consider the market for electricity. There is only one provider of electricity in the market. Use the given information to answer questions 1. The firm maximizes profit, how much is the MR? 2. How much is the maximized profit? 3. The demand for electricity increases since people use air-conditioners more often. (i) What happens to the demand curve? (ii) Will the firm’s profit increase or decrease?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Consider the market for electricity. There is only one provider of electricity in the market. Use the given information to answer questions

1. The firm maximizes profit, how much is the MR?

2. How much is the maximized profit?

3. The demand for electricity increases since people use air-conditioners more often.
(i) What happens to the demand curve?
(ii) Will the firm’s profit increase or decrease?

4. Explain why the market for electricity may be dominated by one firm.

Price
MC
ATC
$25
$20
$17
$14
$10
MR:
D
40
70
Quantity
Transcribed Image Text:Price MC ATC $25 $20 $17 $14 $10 MR: D 40 70 Quantity
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