Question

Currently, a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers....

Currently, a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers. An 11th consumer walks in. Should the company provide service to the additional customer?

Currently, a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers. An 11th consumer walks in. Should the company provide service to the additional customer?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

a) A monopoly maximizes its profit at the point where the marginal cost and marginal revenue are equal. When the MR is $5 and MC is $10 the frim need to increase the price (MR) and decrease the output (MC) to maximize the profit. Producing one more good will not be beneficial for the economy. so, the company should not serve the 11th consumer

b) Here, the situation is opposite we need to decrease the price (MR) and increase the quantity (MC) so yes, the firm should serve the 11th consumer.  

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Part A A demand curve is P = 10- Q. So its MR is A)5-2Q B)10-...
Part A A demand curve is P = 10- Q. So its MR is A)5-2Q B)10- 4Q C)10 - Q D)10 -2Q Part B A non- competitive firm's demand curve is P = 10- 2Q. So its MR is A)5-2Q B)10- 4Q C)10 - Q D)5 - Q Part C "If a firm with pricing power in the market faces a demand curve of P = 1800-2Q and marginal costs of MC = 200, how much is the equilibrium (profit...
Attempts:                 Keep the Highest:   / 2 5. Interpreting MR and MC A car wash that...
Attempts:                 Keep the Highest:   / 2 5. Interpreting MR and MC A car wash that provides car washes has determined that it faces the daily revenue and cost data shown in the following table. Complete the following table by determining the marginal revenue (MR) and marginal cost (MC) associated with changes in output from 0 to 15, 15 to 30, and 30 to 45 car washes per day, and enter your answers in the appropriate column. Hint: Remember that...
Quantity TC Price of TR ATC AVC MC MR MR-MC Profit change in good profit 0...
Quantity TC Price of TR ATC AVC MC MR MR-MC Profit change in good profit 0 10 5 0 1 15 5 5 15 5 5 5 2 18 5 10 9 4 3 5 3 20 5 15 6.67 3.33 2 5 4 21 5 20 5.25 2.75 1 5 5 23 5 25 4.6 2.6 2 5 6 26 5 30 4.33 2.67 3 5 7 30 5 35 4.29 2.86 4 5 8 35 5 40 4.38...
Q P TR MR TC MC 0 10 ---- 4 1 9 8 2 8 11...
Q P TR MR TC MC 0 10 ---- 4 1 9 8 2 8 11 3 7 13 4 6 14 5 5 16 6 4 19 7 3 24 8 2 30 What profit should this firm be earning?
A monopolistic firm currently prices its product at $10 and it is able to sell 1000...
A monopolistic firm currently prices its product at $10 and it is able to sell 1000 units. If it cuts price by 10% sales will go up to 1200 units. Marginal cost (MC) is $5. a. How will the break-even point change? b. Is it worth cutting price? (i.e., is profit greater)
Consider the demand for a public good estimated for two sets of consumers: P1 = -0.5Q...
Consider the demand for a public good estimated for two sets of consumers: P1 = -0.5Q + 10 P2 = -0.25Q + 5 where P is the price that each consumer is willing to pay at difference levels of quantity. The cost of providing one additional unit of this public good is $4 (e.g., marginal cost (MC) = $4) a) Derive the equation of the market demand curve for this public good. Hint: Remember that in this case you have...
You are working as a Manager at ABC Company and you manage 10 junior customer service...
You are working as a Manager at ABC Company and you manage 10 junior customer service officers. You are interested in taking on more managerial roles and responsibilities. You know that the company has a program dedicated to assisting staff with self-improvement and development, as long as it is in line with the company’s main goals of improving customer service and providing an exceptional experience to all customers. You can see current employees’ skills and knowledge below: Roles and responsibilities...
Cullowhee Interior Design provides home and office decorating assistance to its customers. In normal operation, an...
Cullowhee Interior Design provides home and office decorating assistance to its customers. In normal operation, an average of 2.5 customers arrive each hour. One design consultant is available to answer customer questions and make product recommendations. The consultant averages 10 minutes with each customer. Cullowhee’s management would like to evaluate the following two alternatives: • Option 1: Provide extra training to the existing consultant which will result in average service time of 8 minutes per customer. • Option 2: Hire...
Authentic Car Services’ labor force includes drivers and dispatchers, and all report to work if the...
Authentic Car Services’ labor force includes drivers and dispatchers, and all report to work if the firm is providing service. Firm’s additional costs can be described by the equations: MC = 2 + 0.01Q and AVC = 2 + 0.005Q, where Q is the number of trips per week. Now consider that consumers’ income increases, and transportation services is a normal good. As a result, the new market demand for transportation services is described by one of the following equation...
1.      The MR = MC rule applies Multiple Choice a.       in the long run but not...
1.      The MR = MC rule applies Multiple Choice a.       in the long run but not in the short run. b.      in the short run but not in the long run. c.       in both the short run and the long run. d.      only to a purely competitive firm. 2.     A firm in a purely competitive industry is currently producing 1,000 units per day at a total cost of $700. If the firm produced 800 units per day, its total cost...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT