Question

Kranston Foods is a profit maximizing firm in a monopolistic competition industry. If they produce 100...

Kranston Foods is a profit maximizing firm in a monopolistic competition industry. If they produce 100 units and their marginal revenue is $55 then what is their marginal cost?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer :

A profit maximizing monopolistic competition firm produces at the point where the marginal cost equals the marginal revenue. In other words it profit maximizes at the point where the additional revenue earned from the sale of an unit of the good equals the additional cost incurred to produce it.

Here the firm produces 100 units and their marginal revenue is $55.

Thus applying the profit maximizing condition : Marginal Revenue = Marginal Cost = $55

Answer : Their marginal cost is also $55 (since Marginal Revenue = Marginal Cost)

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
1. At what quantity does the profit-maximizing perfectly competitive firm produce? A. where total revenue minus...
1. At what quantity does the profit-maximizing perfectly competitive firm produce? A. where total revenue minus marginal revenue is at a maximum B. where marginal revenue minus marginal cost is at a maximum C. where total revenue minus total cost is at a minimum D. where marginal revenue minus marginal cost is at a maximum E. where marginal revenue is equal to marginal cost 2. What is the consequence of a firm selling a similar product in a competitive market?...
The profit-maximizing rule MC = MR is followed by firms under: A. monopolistic competition, but not...
The profit-maximizing rule MC = MR is followed by firms under: A. monopolistic competition, but not perfect competition. B. perfect competition, but not monopolistic competition. C. either monopolistic competition or perfect competition, depending on the costs of production. D. both monopolistic competition and perfect competition.
2. State the profit-maximizing conditions under monopolistic competition in the short-run b) State the profit-maximizing conditions...
2. State the profit-maximizing conditions under monopolistic competition in the short-run b) State the profit-maximizing conditions under oligopoly.
Assume a firm is operating under perfect competition and after profit maximizing, it finds that its...
Assume a firm is operating under perfect competition and after profit maximizing, it finds that its Price is P=200 and its average total costs are 180. Is this firm making a profit or a loss and how do you know (explain). Further, will that level of profit or loss continue for this firm for a long time – why or why not? Explain.    •   Assume that after profit maximizing, a monopolist finds that its price is 100, its output...
If a profit-maximizing firm is producing an output level in which marginal revenue exceeds marginal cost,...
If a profit-maximizing firm is producing an output level in which marginal revenue exceeds marginal cost, should it produce more, less or the same? Why? What is the profit-maximizing quantity for any firm to produce?
Step 1 Read the following scenario. Imagine a firm in monopolistic competition. A firm in monopolistic...
Step 1 Read the following scenario. Imagine a firm in monopolistic competition. A firm in monopolistic competition produces a product that you are familiar with, such as clothing and food. A monopolistic competition is a market in which: many firms compete each firm produces a product that is slightly different from products of other competing firms each firm competes on product quality, price, and marketing each firm is free to enter and exit the market Step 2 Use the scenario...
2. You have been hired to do some consulting for Fishy Joe’s, a profit-maximizing monopolistic competitor...
2. You have been hired to do some consulting for Fishy Joe’s, a profit-maximizing monopolistic competitor selling “popplers”. You have estimated the firm’s demand, marginal revenue, and marginal cost curves to be, respectively, P = 100 − 2Q, MR = 100 − 4Q, and MC = 20 + Q, where quantity Q is measured in servings and prices are measured in dollars per serving. Currently, the firm is producing where • Price = $50/serving • Average Total Cost = $38/serving...
Draw a diagram illustrating the case of a firm in monopolistic competition losing money. Label the...
Draw a diagram illustrating the case of a firm in monopolistic competition losing money. Label the demand curve D, the marginal revenue curve MR, the marginal cost curve MC, and the average total cost curve ATC. Show the quantity the firm will chose to produce and the price it will charge and mark those Q1 and P1 respectively.
A profit-maximizing firm in a perfectly competitive market that is facing a price of $10 decides...
A profit-maximizing firm in a perfectly competitive market that is facing a price of $10 decides to produce 100 widgets. This results in an economic profit of $80. If the marginal cost of producing the 100th widget was $12 then this firm should: produce less than 100 set the price at $12 produce more than 100 continue producing 100 Which of the following is true for the firm in a perfectly competitive industry? There are no pricing decisions to be...
Suppose that a paper market is perfectly competitive. A profit-maximizing competitive firm in this market has...
Suppose that a paper market is perfectly competitive. A profit-maximizing competitive firm in this market has marginal cost of $5, profit of $100 and 50 units of paper. (a) Compute total revenue and total cost (10 points). (b) Suppose that the firm has variable cost of $50. Compute the average variable cost and fixed cost.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT