QUESTION 4: The graph below shows the demand and costs data for a one of firms operating in a market with a highly differentiated product All underlying work must be shown MC ATC $11.50 $10.00 $9.00 $6.00 MR 200 400 700 900 Quantity A) Refer to the graph above. If the firm in the graph above maximizes profit, it will produce _units of output and charge price per unit. A) 400; $10 B) 600; $6 C) 900; $9 D) 600; $11.50 B) Refer to the graph above. At the profit maximizing output level, the firm from above will earn: A) zero economic profit. B) $900 total economic profit. C) $2,700 economic profit. D) $2,700 economic loss. C) Refer to your answer above. You can conclude that if there are no barriers to entry: new firms will enter this industry in the long run in a search of profit. b) existing fims will exit this industry in the long run because of the short-run losses. c) this industry is in long-run equilibrium, and there are no incentives to enter or exit. d) the price per unit of output is equal to the minimum possible average total cost. Price

QUESTION 4: The graph below shows the demand and costs data for a one of firms operating in a market with a highly differentiated product All underlying work must be shown MC ATC $11.50 $10.00 $9.00 $6.00 MR 200 400 700 900 Quantity A) Refer to the graph above. If the firm in the graph above maximizes profit, it will produce _units of output and charge price per unit. A) 400; $10 B) 600; $6 C) 900; $9 D) 600; $11.50 B) Refer to the graph above. At the profit maximizing output level, the firm from above will earn: A) zero economic profit. B) $900 total economic profit. C) $2,700 economic profit. D) $2,700 economic loss. C) Refer to your answer above. You can conclude that if there are no barriers to entry: new firms will enter this industry in the long run in a search of profit. b) existing fims will exit this industry in the long run because of the short-run losses. c) this industry is in long-run equilibrium, and there are no incentives to enter or exit. d) the price per unit of output is equal to the minimum possible average total cost. Price

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 1.3P

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