Question

29. A monopolist faces a downward sloping demand curve, P = 461.0 - 13.5*Q. The maximum total revenue will be ____. A) $3935.57 B) $461.0 C) $691.5 D) $922.0 30. If the price in a competitive market is $30, and the demand curve is given by the equation P = 90 - 3Q, then the consumer surplus will be ____. A) $1,000 B) $1,200 C) $600 D) $300 31. The short-run supply curve of a firm in perfect competition is the rising segment of its short-run: A) marginal cost curve. B) average fixed cost curve. C) average variable cost curve. D) marginal cost curve above its average variable cost curve. E) average total cost curve. 32. If all prices double, your budget line will shift halfway back to the origin. A) True B) False 33. The equation for the demand curve is P = 835 - (1)Q. When Q goes from 329 to 330, then the price must go from ____ to ____. A) $506 ; $508 B) $506 ; $505 C) $508 ; $505 D) $508 ; $506

Answer 1

(29) (A)

Revenue (R) = P x Q = 461Q - 13.5Q²

Revenue is maximized when dR/dQ = 0

461 - 27Q = 0

27Q = 461

Q = 17

P = 461 - (13.5 x 17) = 461 - 229.5 = 231.5

R = 231.5 x 17 = 3,935.5

(30) (C)

When P = 30, from demand function:

30 = 90 - 3Q

3Q = 60

Q = 20

When Q = 0, P = 90 (Vertical intercept)

Consumer surplus = Area between demand curve and market price = (1/2) x $(90 - 30) x 20 = 10 x $60 = $600

(31) (A)

(32) True

If both prices increase, budget line shifts halfway inside.

(33) (B)

Demand curve: P = 835 - Q

When Q = 329, P = 835 - 329 = 506

When Q = 330, P = 835 - 330 = 505