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 amount of money given
by one party to another in return for goods or services.
MATCHING DEFINITION
A resource use when it is
not possible to make someone better off without making someone else worse off.
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 $750.00 (i.e., AC = MC = $750).
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 $375.00 (i.e., AC = MC = $375).
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 = 95 000 – 200P + 0.7M – 6 000PR
MC = 40 + 0.09Q
TVC = 29Q
TFC = 160 000
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 $210 000 and PR to be $11.
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 $ .
A firm with market power is producing a level of output at which price
is
$38, marginal revenue is $33, average variable cost is $21,
and marginal cost is
$16.In order to maximize profit, the firm should
price.In order to maximize profit, the firm should
price.Use the figure to answer to answer the following 3 questions. The figure above shows the demand and cost curves facing a price-setting firm.
1) The profit-maximizing (or loss-minimizing) level of output is .
2) In profit-maximizing (or loss-minimizing) equilibrium, the price-setting firm earns$ in total revenue, which is than the maximum possible total revenue of $ .
3) In short run the maximum profit the firm can earn is $ .
If this is a perfect price-discriminating monopoly, what is consumer surplus?
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