Question

State whether the following question is true
or false. Support your answer with brief explanation.

If a firm with marginal cost equal to $2 faces a
demand curve defined as Q_d = 100 - 5P, then profit is at a maximum
when price is $10. [3 marks]

If a firm with marginal cost equal to $2 faces a demand curve defined as Q_d = 100 - 5P, then revenue is at a maximum when price is $10. [3 marks]

A firm should increase expenditures on marketing and product variation up to the point where an additional dollar spent generates a marginal revenue of no less than one dollar. [3 marks]

If a firm is experiencing decreasing returns to scale, then a doubling of output will require more than a doubling of all inputs. [3 marks]

The more price elastic is the demand for a good or service, the higher will be the price mark-up over the marginal cost of production. [3 marks]

State whether the following question is true
or false. Support your answer with brief explanation.

If a firm with marginal cost equal to $2 faces a
demand curve defined as Q_d = 100 - 5P, then profit is at a maximum
when price is $10. [3 marks]

If a firm with marginal cost equal to $2 faces a demand curve defined as Q_d = 100 - 5P, then revenue is at a maximum when price is $10. [3 marks]

A firm should increase expenditures on marketing and product variation up to the point where an additional dollar spent generates a marginal revenue of no less than one dollar. [3 marks]

If a firm is experiencing decreasing returns to scale, then a doubling of output will require more than a doubling of all inputs. [3 marks]

The more price elastic is the demand for a good or service, the higher will be the price mark-up over the marginal cost of production. [3 marks]

Answer #1

1. Demand : Q = 100 - 5P

Or, 5P = 100 - Q

Or, P = 20 - 0.2Q

Or, PQ = 20 Q - 0.2Q² = TR

Or, MR = d(TR)/dQ = 20 - 0.4Q

Profit will be maximized by producing at the point where MR=MC and profit maximizing price will be determined at the point where profit maximizing quantity lies on the demand curve.

Therefore, 20 - 0.4Q = 2

Or, 0.4Q = 18

Or, Q = (18/0.4)= 45

Now from demand equation we get, when Q = 45, P = 20 - (0.2*45) = 20 - 9 = 11

Therefore, profit maximizing price is $11

Answer: the given statement is FALSE.

2. In the previous question, we found out that for this demand equation, MR = 20 - 0.4Q.

Revenue is maximized when d(TR)/dQ = MR = 0

Therefore, 20 - 0.4Q = 0

Or, 0.4Q = 20

Or, Q = 20/0.4 = 50

Now from the demand equation we get, when Q= 50, P = 20 - (0.2*50) = 20 - 10 = 10.

Therefore, the given statement is TRUE.

Answer true or false as the case may be
1. Generally the prices of a monopoly industry will be higher than
those of a competitive industry.
2. Monopolists generally want the demand curve they face in the
market to be more elastic, in order to increase prices and total
income.
3. Diminishing returns means that production is reduced.
4. The average income curve and the marginal income curve is the
same as the demand faced by a firm in a...

Determine whether each of the following statements is true or
false and explain why you think so.
a) In perfectly competitive market, the long-run supply curve is
downward sloping in decreasing cost industry.
b) The marginal revenue for a perfectly competitive firm is
equal to the market price. The marginal revenue for a monopolist is
greater than the market price for positive quantities of
output.
c) To calculate the Lerner Index for a particular firm, you need
to know price...

1. Determine whether each of the following statements is true or
false and explain why you think so.
a) In perfectly competitive market, the long-run supply curve is
downward sloping in decreasing cost industry.
b) The marginal revenue for a perfectly competitive firm is
equal to the market price. The marginal revenue for a monopolist is
greater than the market price for positive quantities of
output.
c) To calculate the Lerner Index for a particular firm, you need
to know...

State whether the following statements are true, false or
uncertain and briefly explain the reason for your choice. Your
grade will largely depend on the quality of your explanations.
a. Suppose that a firm’s short-run total cost function is STC=
0.1q2 + 4q +100. Will the producer surplus at P=$15 be $302.5?
b. Suppose that a firm is price taker. If the price is equal to
marginal cost, then the profit is being maximized.
c. If a firm wished to...

A-TRUE/FALSE-....1-. The quantity demanded is the quantity that
consumers are willing and able to purchase at a given price. 2- A
vertical reading of the demand curve gives the maximum price per
unit that consumers are willing to pay for a particular quantity of
a good. 3- There are more substitutes for oil as a jet fuel than
for oil as a lubricant. 4-. An increase in income increases the
demand for normal goods. 5-. Producer surplus can be defined...

Q4. State whether the following are true or false with a brief
explanation (1-2 sentences).
(i) Given a control volume with one inlet and two exits, the two
exits must have identical mass flow rates.
(ii) You are given a control volume with one inlet and one exit
such that more ‘mechanical energy’ is coming in than going out
(‘mechanical energy’ is the sum of enthalpy, kinetic energy and
potential energy per unit mass), but are given no information on...

Question 1: True, False or uncertain
Explain whether each of the following statement is true, false
or uncertain. Start your answer by selecting one of the three
statements – “True”, “False” and “Uncertain” and then provide
arguments to justify your selection (be brief and concise in less
than 100 words). You need to make assumption clear, reasonable and
explicit if making any. The quality and logic of arguments
determine your marks. (4 marks each)
The price of cars produced in...

Assess whether the following statements are true or false. Do
not forget to motivate your answer.
A firm produces space ships using robots and humans as the only
inputs. The production function is
f(L,K)=L2+K2
where L represents human and K represents robot. The price of a
human is w = 1 and the price of a robot is v = 1.
Claim: In the interest of minimizing its long run cost of
production, the Örm should use an equal amount...

1.Which of the following does not contribute to the existence of
monopoly power? A)A relatively inelastic market demand curve B)A
pure cost or quality advantage C)A continuously decreasing long-run
average cost curve D)The control of essential inputs in the
production process E)The possession of a patent
2.Which of the following is true of a pure monopoly? A)A pure
monopoly produces at the level where price equals marginal cost.
B)A pure monopoly faces a horizontal demand curve. C)A pure
monopoly is...

: State whether the following statements are
TRUE, FALSE or UNCERTAIN; and justify your answers: Matt lives on
popcorn and seafood salads. The price of popcorn is 1 dollar per
bag and the price of seafood salads is 2 dollars each. Matt allows
himself to spend no more than 13 dollars a day on food. He also
restricts his consumption to 5,500 calories per day. There are
1,000 calories in a bag of popcorn and 500 calories in a seafood...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 14 minutes ago

asked 14 minutes ago

asked 15 minutes ago

asked 15 minutes ago

asked 15 minutes ago

asked 17 minutes ago

asked 21 minutes ago

asked 25 minutes ago

asked 27 minutes ago

asked 31 minutes ago

asked 32 minutes ago

asked 45 minutes ago