Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText - Access Card Package (12th Edition)
12th Edition
ISBN: 9780134004983
Author: Michael Parkin
Publisher: PEARSON
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Chapter 13, Problem 5SPA
(a)
To determine
(b)
To determine
Efficiency of the monopolist.
(c)
To determine
Impact of new wells nearby the monopolist firm.
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Figure 12-6
Price
(dollars
per pound)
Market 3
price
2
0
10
20
30
MC
ATC
D=MR
40
Quantity
(thousands of pounds)
Figure 12-6 shows the demand, marginal cost (MC) and average total cost (ATC) curves for
Jason's House of Apples.
Refer to Figure 12-6. Jason is currently producing 20 thousand pounds of apples. To maximize his
profit Jason should
keep production at 20 thousand pounds.
O increase production to the output rate indicated by point e.
increase production to the output rate indicated by point d.
O decrease production to the output rate indicated by point a.
1. Price and output in a competitive price-searcher market
Consider a price-searching firm, Sean's Fire Engines, which sells fire engines in the fictional country of Pyrotania. Initially, Sean's produced six fire
engines but then decided to increase production to seven fire engines. The following graph shows the demand curve the firm faces. To sell the
additional engine, Sean's must lower its price from $100,000 to $50,000 per engine. (Hint: Sean's Fire Engines gains revenue from the additional
engine it sells, but it also loses revenue from the initial six engines because it sells them all at the lower price.)
On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial six engines by
selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from
selling an additional engine at $50,000.
re engine)
250
225
200
Q Search
Revenue Lost
Col
a. Demonstrate what happens in the short run on both graphs when a new medical study shows soy beans to be an effective weight-loss supplement. On the market graph, you will shift a curve (or curves). On the firm's graph, use "Price 2" to draw a new price line for the firm. On both graphs, indicate the new equilibrium points with the points labeled B.
b. Now, demonstrate the changes that get both graphs back to long run equilibrium. Use shift(s) for the market and "Price 3" for the firm. Indicate the new long-run equilibrium with the green points labeled C.
Chapter 13 Solutions
Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText - Access Card Package (12th Edition)
Ch. 13.1 - Prob. 1RQCh. 13.1 - Prob. 2RQCh. 13.1 - Prob. 3RQCh. 13.2 - Prob. 1RQCh. 13.2 - Prob. 2RQCh. 13.2 - Prob. 3RQCh. 13.2 - Prob. 4RQCh. 13.3 - Prob. 1RQCh. 13.3 - Prob. 2RQCh. 13.3 - Prob. 3RQ
Ch. 13.3 - Prob. 4RQCh. 13.4 - Prob. 1RQCh. 13.4 - Prob. 2RQCh. 13.4 - Prob. 3RQCh. 13.4 - Prob. 4RQCh. 13.5 - Prob. 1RQCh. 13.5 - Prob. 2RQCh. 13.5 - Prob. 3RQCh. 13.5 - Prob. 4RQCh. 13 - Prob. 1SPACh. 13 - Prob. 2SPACh. 13 - Prob. 3SPACh. 13 - Prob. 4SPACh. 13 - Prob. 5SPACh. 13 - Prob. 6SPACh. 13 - Prob. 7SPACh. 13 - Prob. 8SPACh. 13 - Prob. 9SPACh. 13 - Prob. 10APACh. 13 - Prob. 11APACh. 13 - Prob. 12APACh. 13 - Prob. 13APACh. 13 - Prob. 14APACh. 13 - Prob. 15APACh. 13 - Prob. 16APACh. 13 - Prob. 17APACh. 13 - Prob. 18APACh. 13 - Prob. 19APACh. 13 - Prob. 20APACh. 13 - Prob. 21APACh. 13 - Prob. 22APACh. 13 - Prob. 23APACh. 13 - Prob. 24APACh. 13 - Prob. 25APA
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