5 Econ 101 Questions

1.

Use the graph below to answer the following questions. 100' MC ATC Dollars per Unit (.31 D MR 0 5.000 10.000 15 000 Units per Period Round your answers to 2 decimal places, if necessary. Do not enter the comma , , or a dollar sign ($) while entering your answer. What is the monopolist's profitmaximizing output? At the profitmaximizing output rate, what is the average total cost? At the profitmaximizing output rate, what is the average revenue? At the profitmaximizing output rate, what is the monopolist's total cost? At the profitmaximizing output rate, what is the monopolist's total revenue? What is the maximum profit? The marginal revenue curve of a monopoly crosses its marginal cost curve at $38 per unit, and an output of 3 million units. What is the profitmaximizing (lossminimizing) output? _ million units The price that consumers are willing to pay for this output is $45 per unit. If it produces this output, the firm's average total cost is $45 per unit, and its average fixed cost is $2 per unit. What are the firm's economic profits (or economic losses)? $_million. Include the minus sign, if necessary. Do not enter the dollar sign ($) while entering your answer. The data below, shows the demand schedule faced by a monopolist. Assume that the marginal cost is $40. Answer the following questions: Quantity Price Demanded $50 10 $45 20 $40 30 $35 40 $30 50 The profitmaximizing monopolist will sell at a price of $ _. The profitmaximizing monopolist will sell at a quantity of units. Suppose a monopolist can divide its market into two segments and it is able to practice price discrimination. If the two segments do not have the same price elasticity of demand, will the monopolist charge a higher or lower price in the market where the demand is relatively more inelastic? Answer: The monopolist will charge a |:| price in the market that is relatively more inelastic. If the demand is inelastic, the consumers are |:| to price changes, thus the monopolist |:| increase price without lowering quantity demanded by the same proportion. You own four firms that produce different products. The following table summarizes the conditions in each firm. After calculating the missing numbers for each firm, make one of the following four decisions regarding operations in each firm. (a) continue producing the same output level (b) shut down (c) increase output (d) decrease output Firm P MR TR Q TC MC ATC AVC A 11 8 20 200 5 9 B 3 1 '100 1.5 2.5 2 c '4 2 '200 ' '2 7 '5 D '8 5 ' '10 70 '5 '6 Answer: Increase production Decrease production Produce at the same level Shutdown