Question 3 If marginal revenue is less than marginal cost at every level of output, a profit maximizing firm should a. produce where the difference between MR and MC is greatest. b. not produce any output. c. produce where total revenue is maximize d. produce where the difference between TR and MC is greatest.
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- Explain in words why a profit-maximizing film will not choose to produce at a quantity where marginal cost exceeds marginal revenue.Quantity sold Price 3 $10 4 $10 5 $10 (a) In the above table, if the firm sells 5 units of output, what's total revenue? (b) In the above table, if the quantity sold by the firm rises from 3 to 4, what's marginal revenue? (c) In the above table, if the quantity sold by the firm rises from 5 to 6, what's average revenue?Use Table A below and calculate ATC, Profit, marginal revenue and marginal cost at each quantity of output - keep your calculation for follow up questions: Q P TR TC ATC Profit MR MC 0 $1,900 $0 $1,000 1 $1,700 $1,700 $2,000 2 $1,650 $3,300 $2,800 3 $1,600 $4,800 $3,500 4 $1,550 $6,200 $4,000 5 $1,500 $7,500 $4,500 6 $1,450 $8,700 $5,200 7 $1,400 $9,800 $6,000 8 $1,350 $10,800 $7,000 9 $1,300 $11,700 $9,000 a. Q P TR TC ATC Profit MR MC 0 $1,900 $0 $1,000 $0 -$1000 $0 $0 1 $1,700 $1,700 $2,000 $2,000 -$300 $1,700 $1,000 2 $1,650 $3,300 $2,800 $1,400 $500 $1,600 $800 3 $1,600 $4,800 $3,500 $1,166.66 $1,300…
- Use Table A below and calculate ATC, Profit, marginal revenue and marginal cost at each quantity of output - keep your calculation for follow up questions: Q P TR TC ATC Profit MR MC 0 $1,900 $0 $1,000 1 $1,700 $1,700 $2,000 2 $1,650 $3,300 $2,800 3 $1,600 $4,800 $3,500 4 $1,550 $6,200 $4,000 5 $1,500 $7,500 $4,500 6 $1,450 $8,700 $5,200 7 $1,400 $9,800 $6,000 8 $1,350 $10,800 $7,000 9 $1,300 $11,700 $9,000 a. Q P TR TC ATC Profit MR MC 0 $1,900 $0 $1,000 $0 -$1000 $0 $0 1 $1,700 $1,700 $2,000 $2,000 -$300 $1,700 $1,000 2 $1,650 $3,300 $2,800 $1,400 $500 $1,600 $800 3 $1,600 $4,800 $3,500 $1,166.66 $1,300…Question Calculate MC, AVC, and total fixed costs for the data below: Output Total Cost 0 20 1 25 2 30 3 35 4 40 5 45 6 50 7 55 8 60 Sketch the MC and the AVCcurves. Given that each output is sold at $8.5, calculate Average Revenue, Marginal Revenue, and profitQ2. Ramzah owned a burger stands along the beach. Figure 2 shows Ramzah’s cost curves. Figure 2: Market for Burger (a) What is Perfect Competition? (b) If the market price of a burger is $4, what is Ramzah’s profit-maximizing output? (c) Calculate the economic profit that Ramzah’s makes. (d) With no change in demand or technology, how will the price change in the long run? (e) Distinguish between technological efficiency and economic efficiency.
- How much should the firm produce to maximize its profit? What is the firms AR? What is the firms MR? How much is the firms total revenue based on the profit maximization rule? How much is the firms total cost? How much is the firms total profit?a) What is the profit maximising condition in a market with perfect competition?b) Explain what is meant by abnormal profit? What is the adjustment process from short-run abnormal profit to long-run equilibrium in a perfectly competitive market?c) Please find below Pricing options for firm A and B, along with individual payoffs (Firm A’s payoff/Firm B’s payoff)Firm BFirm APrice £2 Price £1Price £2 £20,000/£20,000 £10,000/£24,000Price £1 £24,000/£10,000 £12,000/£12,000Assume you are the pricing manager at Firm A;i) What is your payoff for a ‘maximin’ strategy?ii) What is your payoff for a ‘maximax’ strategy?iii) Does a dominant strategy exist within this prisoners’ dilemma?5. Restaurants offer related but differentiated products to their consumers. In the long run, new restaurants enter the market and imitate the cuisine and atmosphere of successful competitors. How would you expect a restaurant to set its prices in the long run? Describe the relationship between price and average total cost. Does a restaurant earn economic profits?
- Consider the following short-run data for a perfect competitor. Use the data to answer the following questions. Justify your answers and calculations. Quantity Demanded Price TC TVC MC 0 22 150 - 1 20 2 15 3 22 4 34 5 54 6 78 d) What is the profit maximizing level of output for this producer? e) Calculate profits or losses at all levels of output.Restaurants offer related but differentiated products to their consumers. In the long run, new restaurants enter the market and imitate the cuisineand atmosphere of successful competitors. Howwould you expect a restaurant to set its prices inthe long run? Describe the relationship betweenprice and average total cost. Does a restaurantearn economic profits?Question #5What is the MC=MR Profit Maximization point? What quantity should Delicious Deserts be producing at 'and' what price should they be charging to maximize their profits? Question #6 Why isn't it a good idea for them to produce and sell as many cakes as they can? Is it more profitable to sell less cakes at this current stage of their business? Question #7Do you have any other recommendations for Delicious Deserts to increase their revenues, profits, market share, and client retention?