12. Bob's Barbershop manager has calculated the marginal revenue is Ksh 200 and marginal cost is $250. What should she do to maximize profit? A. expand output. B. do nothing without information about your fixed costs. C. reduce output until marginal revenue equals marginal cost. D. expand output until marginal revenue equals zero. E. reduce output beyond the level where marginal revenue equals zero. 13. People's average incomes fall from £1,000 a week to £600 a week. As a result, demand for potatoes increases from 1 million tonnes to 1.2 million tonnes a week. The income elasticity of demand for potatoes is A. -0.25 В. 0.6 С. -0.5 D. -2 14. If the price of a good with a price elasticity of supply of 2.5 increases by 10%, the quantity supplied will: A. Fall by 25% B. Rise by 25% C. Fall by 40% D. R ise by 0.4% 15. A firm facing a perfectly price elastic demand curve, ceteris paribus A. can sell all it produces only by lowering its price below the market price. B. can raise its price and not lose all its customers. C. will sell the same amount regardless if it raises or lowers the price it charges. D. will have zero quantity demanded if it raises its price above the market price

12. Bob's Barbershop manager has calculated the marginal revenue is Ksh 200 and marginal cost is $250. What should she do to maximize profit? A. expand output. B. do nothing without information about your fixed costs. C. reduce output until marginal revenue equals marginal cost. D. expand output until marginal revenue equals zero. E. reduce output beyond the level where marginal revenue equals zero. 13. People's average incomes fall from £1,000 a week to £600 a week. As a result, demand for potatoes increases from 1 million tonnes to 1.2 million tonnes a week. The income elasticity of demand for potatoes is A. -0.25 В. 0.6 С. -0.5 D. -2 14. If the price of a good with a price elasticity of supply of 2.5 increases by 10%, the quantity supplied will: A. Fall by 25% B. Rise by 25% C. Fall by 40% D. R ise by 0.4% 15. A firm facing a perfectly price elastic demand curve, ceteris paribus A. can sell all it produces only by lowering its price below the market price. B. can raise its price and not lose all its customers. C. will sell the same amount regardless if it raises or lowers the price it charges. D. will have zero quantity demanded if it raises its price above the market price

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to the diagram to the right. In the long run, why will the firm produce Q, units and not Q units, which has a lower its average cost of production? OA. Although its average cost of production is lower when the firm produces Qg units, to be able to sell its output the firm will have to charge a price below average cost, resulting in a loss. B. The firm's goal is to charge a high price and make a small profit rather than a low price and no profit. O C. At Qg. average cost exceeds marginal cost so the firm will actually make a loss. Op. At Qg, marginal revenue t is less than average revenue cost which will result in a loss for the firm. Price and cost per unit ($) MR Q₁ QgQnQj Quantity MC ATC
1c. Using Excel or grid paper, based on the above information, plot the demand curve, MR curve, MC curve and ATC curve. Label the profit-maximizing quantity and price, total cost, total revenue and profit.
12. A current shortage is due to a price ceiling. If the price ceiling is removed, a. price would increase, quantity supplied would increase, and quantity demanded would decrease b. price would increase, quantity supplied would decrease, and quantity demanded would increase c. price would decrease, quantity supplied would increase, and quantity demanded would decrease d. price would decrease, quantity supplied would decrease, and quantity demanded would increase 13. Adverse selection refers to a. the phenomenon that occurs when one party in an exchange takes advantage of knowing more than another party b. the tendency for individuals to alter their behaviour once they are insured against loss c. the tendency for individuals to engage in insurance fraud d. both the tendency for individuals to alter their behaviour once they are insured against loss and the tendency for individuals to engage in insurance fraud
If a firm's marginal revenue is smaller than its marginal cost, then the firm should a. increase output to increase profit. b. decrease output to increase profit. c. keep output the same. d. collect additional information before taking any action.
Dollars A BC O Hi K O G O Multiple Choice I ELM N MC MR Quantity Refer to the diagram. At the profit-maximizing level of output, the firm will realize ATC Demand an economic profit of A-B-H-J. a loss of GH per unit. an economic profit of A-C-G-J. a loss of JH per unit.
Please follow instructions and follow graph. Show work
The graph below is for answering the next 5 questions (18 to 22): Price MC ATC $10 R AC EFG Afc AUC AC Quantity L9 At the profit maximizing level of output, when price is $10, The firm Xis earning economic profit. b. Profits per unit-are the greatest. C. Average variable cost equals ZC. d. Allof the above.
Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. To maximize its profits, the firm should produce units and charge a price of $ . b. At the profit-maximizing level of output, average total cost per unit is $ . c. At its profit-maximizing level, profits are $ .