ECON-1010-D1/D2-Introduction to Microeconomics
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Use the figure to answer the following six questions about Smart Dagi Inc., a firm in monopolistic competition that produces calculators.
To maximize economic profit, this firm produces calculators per day.
To maximize economic profit, this firm will charge a price of $ per calculator.
At the profit-maximizing output level, the firm makes an economic profit of $ .
At the profit-maximizing output level, the firm's markup is $ per calculator.
If the firm produced the efficient quantity, it would produce calculators per day.
At the profit-maximizing output level, the firm has excess capacity of calculators per day.
MATCHING DEFINITION
The process of bringing a
new good or service to market.
MATCHING DEFINITION
A market structure in which
a large number of firms make similar but slightly different products and
compete on product quality, price, and marketing, and firms are free to enter
or exit the market.
MATCHING DEFINITION
New firms come into a market
in which existing firms are making an economic profit and the number of firms
increases.
MATCHING DEFINITION
The quantity at which
average total cost is a minimum—the quantity at the bottom of the U-shaped ATC
curve.
Use the figure to answer to answer the following 8 questions.
The figure above shows demand and marginal revenue for a single price monopoly.
At any price above $ demand is elastic.
Assume production costs are constant and equal to $450.00 (i.e., AC = MC = $450).
1) Output is units per day at a price of $ per unit.
2) Profit is $ .
3) Consumer surplus is $ .
4) If this market was perfectly competitive, output would exceed the single-price monopoly output by units.
Assume this is a perfectly price discriminating monopoly at a constant cost equal to $225.00 (i.e., AC = MC = $225).
5) The lowest price charged per unit is $ .
6) Output is .
7) Profit is $ .
8) Consumer surplus is $ .
A firm with market power faces the following estimated demand, marginal cost and total cost functions:
Qd = 86 000 – 200P + 0.6M – 2 000PR
MC = 40 + 0.09Q
TVC = 37Q
TFC = 850 000
where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good.
The firm expects income to be $110 000 and PR to be $8.
The Marginal Revenue Function is MR = – Q
The profit-maximizing choice of output is units.
The profit-maximizing price is $ .
The firm's profit is $ .
In order to maximize profit, the firm should
.The firm should (select all that applies):
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