Consider the tabled revenue and cost data to the right. Answer the questions that follow . Quantity Price=AR MR MC ATC profit Chart Title 1 51) A. What is the profit maximizing level of output? 130.0 130.0 147.1 146.6 6000 o 500 125.8 121.7 128.9 137.9 -6033.33 160.0 129.1 -7433.33 150.0 60000 1 52) B. What is the total profit at the profit maximizing level? 000 121.7 113.3 112.1 140.0 1500 117.5 105.0 97 120.9 -5100 130.0 0.033333 1 53) C. What is the "mark-up" on marginal cost, the P/MC ratio at Q max? 2000 113.3 96.7 83.3 113.2 266.6667 120.0 2500 109.2 88.3 712 106 7916.667 110.0 1 54) D. What is the implied own price elasticity of demand? 3000 105.0 80.0 60.7 99.3 1710 100.0 500 100.8 93.1 27066.67 90.0 1 55) E. At what level of output does price equal marginal cost? 4000 96.7 63.3 44.3 87.5 36666.67 4500 92.5 55.0 38.4 82.3 45900 70.0 5000 88 3 46.7 34 56) F. Using the "triangle area method," estimate Dead Weight Loss. 77.7 53166.67 50.0 50.0 5500 84.2 38.3 212 73.6 58116.67 80.0 30.0 30 70 60000 10.0 57) G. What is the value of the Lerner index: L=(P - MC)/P 1000 6500 75.8 21.7 30.3 66.9 58066.67 0.0 71.7 321 1 58) H. What is -1/L? 7000 13.3 64.4 50866.67 0.0 10.0 7500 67.5 5.0 35.5 62.3 39000 59) T/F Whow! The negative of the reciprocal of the Lerner index is point elasticity of 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 demand. The Lerner Index really contains no more information than elasticity. 8000 63 3 -3.3 40.5 60 8 - Price=AR -MR -MC - 20266.67 8400 60 -10 60 60) What market structure is most consistent with this example? 3500 59.2 -11.7 59.8 -5383.33 A) Perfect Competition; B) Monopolistic Competition; C) Monopoly 9000 55.0 -20.0 55 59.3 -38700 9500 50 .8 -28.3 64.6 59.3 - 80433 . 1 61) At about what Q value would Dead Weight Loss =0? 10000 46.7 36.7 75 7 59.8 -131333 A) 8500 B) 9000 C ) 9500 1 62) What would be the problem of a government regulator imposing this price and quantity that insures zero DWL? A) No problem. The firm owes it to society. 3) The firm would go out of business eventually because it would be making a loss . C) Marginal cost is still equal to price; thus, economic profit would be zero. 1 63) What would be a "fair" regulated price and quantity that still allows the regulated public utility to earn a normal profit? A) $63.3 and 8000 B) $60 and 8400 ) $59.2 and 8500 D) None of the above. 1 64) The estimated value of DWL at the "fair" regulated price is? 1 65) What is the estimated value of DWL with monopoly pricing? 1 66) What is the ratio of DWL at "fair" regulated price to DWL with monopoly pricing? 900 1 67) What is the profit maximizing or loss minimizing quantity? Costs and Revenues 25 1 68) What is the price at the profit maximizing quantity? 50 45 25 1 69) What is the average total cost at the profit maximizing quantity? 1 70) What is profit per unit at the profit maximizing quantity? 1 71) What is the total economic profit? 72) What type of industry is likely to be represented by this graphic? a) perfect competition 25 b) monopolistic competition at long-run equilibrium ) monopoly 1000 1 73) What is the approximate quantity such that price = marginal cost? 1 74) At the profit maximizing quantity, what is the approximate differential between price 5 and marginal cost? 1 75) What is an approximate estimate, using the triangle area method, of the value of 008 006T OOLT 0ooz 009T 008T OOOT 200 DOET 3 006 I OOTT 30 OOST deadweight loss? ....... AC 6) T/F Would you say that this graphic is indicative of long-run equilibrium for the typical firm in this type of industry? 112.5 1 77) What is the ratio of Dead Weight Loss to Total Expenditure at max profit
