Question

1. A pure monopoly is currently producing 10 units of output. At Q = 10, P...

1. A pure monopoly is currently producing 10 units of output. At Q = 10, P = $14 and MC = $12. At Q = 9, P = $15.

Should it have produced the tenth unit of output ? (1 point)

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

No.

Explanation :

MR =change in total revenue /change in quantity

=(140-135)/(10-9)

=5.

Total revenue =Price*quantity

At quantity 10=14*10

=140.

At quantity 9=15*9

=135.

Here at quantity 10, MR is less than MC. So production of this unit is not profitable.

Firm maximises it's profit where MR equals MC.

Marginal revenue is the extra revenue generated by the firm with selling one more extra unit and marginal cost is the extra cost occurred with the production of one more extra unit. So when extra revenue is less than extra cost, production of one more extra unit is not profitable.

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
A perfectly competitive firm is currently producing 10 units of output. Its current total cost is...
A perfectly competitive firm is currently producing 10 units of output. Its current total cost is 85 dollars and its cost curves have the usual shapes. If the firm increased output to 12 units, total cost would rise to 87 dollars. The firm’s fixed cost is 15 dollars. Is Q = 10 the short-run profit-maximizing level of output for this firm? Why or why not? (Explain and show work)
Assume a certain firm in a competitive market is producing Q = 1,000 units of output....
Assume a certain firm in a competitive market is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $15 and its average total cost equals $11. The firm sells its output for $12 per unit. Refer to Scenario 14-1. At Q = 1,000, the firm's profits equal a.$1,000. b.$3,000. c.-$200. d.$4,000.
A firm is currently producing 50 units of output. At this level output produced: - Its...
A firm is currently producing 50 units of output. At this level output produced: - Its average total cost is 140 (ATC = 140) - The market price per unit of outputs is 160 - MR=40 - MC=60 a) Is this firm making profit or loss? How much? b) Are they maximum profits? Why? c) If your answer to part b was NO, what does this firm have to do to maximize profits?
The following table gives a demand schedule faced by some pure monopoly. This firm has a...
The following table gives a demand schedule faced by some pure monopoly. This firm has a constant marginal cost equal to $10 per unit is produces and sells. The firm has 0 fixed costs. How much profit does this firm earn at it's profit-maximizing output level? NOTE: You have to first find the profit-maximizing output level, then compute the profit earned. Q P 0 20 1 18 2 16 3 14 4 12 5 10
Monopoly Consider a monopoly facing an inverse demand function P(q) = 9 − q and having...
Monopoly Consider a monopoly facing an inverse demand function P(q) = 9 − q and having a cost function C(q) = q. (a) Find the profit maximizing output and price, and calculate the monopolist’s profits. (b) Now, suppose the government imposes a per unit tax t = 2 to the monopoly. Find the new price, output and profits. Discuss the impact of that tax.
Each scenario below provides the price and output level at which a single-price monopolist is currently...
Each scenario below provides the price and output level at which a single-price monopolist is currently operating. In each case, determine the firm’s profit per unit, the firm’s total profit, and whether the firm should increase or decrease its output in order to maximize profits, assuming the firm does not shut down. (Drawing diagrams may help you to answer these questions but are not mandatory for this question. Prices and costs are in dollars.) a. P=15,Q=600,MR=7,ATC=5,MC=7 b. P=18,Q=300,MR=13,ATC=5.50,MC=3.50 c. P=11,Q=680,MR=2,ATC=6,MC=9...
A firm's total cost of producing Q units of output is C (Q) = 200 +...
A firm's total cost of producing Q units of output is C (Q) = 200 + 50Q. The inverse demand curve for the firm's product is P(Q) = 80-Q, where P denotes the price of the product. a) If the price of the product is set equal to the firm's average, how much will the firm produce? Hint: choose the larger of the two numbers. Show your work. b) If the firm is under marginal cost pricing, how many units...
Could someone do parts C and D? The following information is for a monopoly: P Q...
Could someone do parts C and D? The following information is for a monopoly: P Q TR TC MR MC 6 0 1 5 1 3 4 2 6 3 3 10 2 4 15 1 5 21 0 6 28 c) What is the "markup"? What is the "markup" equal to for this firm? Explain whether this monopoly market is efficient. d) What is a natural monopoly? Use a graph to illustrate your answer. Explain why it is difficult...
Suppose the (inverse) demand function facing a firm is p(q)=10 – q, where p is the...
Suppose the (inverse) demand function facing a firm is p(q)=10 – q, where p is the price, q is quantity. 1. Draw the (inverse) demand function and marginal revenue. Show your detailed work such as slope, intercept. 2. Suppose the firm has a marginal cost MC=q, and it is the only firm in the market (that is, monopoly). Find the output level and price set by the firm based on your graph in (1). (You do not need to derive...
A competitive firm's cost of production q units of output is C = 18 + 4q...
A competitive firm's cost of production q units of output is C = 18 + 4q + q2 . Its corresponding marginal cost is MC= 4 + 2q. a. The firm faces a market price p= $48. Create a spreadsheet with q = 0, 1, 2, ... 30, where the columns are q, R, C, VC, AVC, MC, and profit. Determine the profit-maximizing output for the firm and the corresponding profit. Should the firm produce this level of output or...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT