23$70$60I of$50$40$30$20-LRATC = LRMC%3D$10Demand = PMR$050100150200250Output (Q)The diagram above shows the demand and cost curves for a market that could either be a monopoly or perfectly competitive in Long-Run Equilibrium. If the market above were Perfectly Competitive, each individual firm would earnin Total Profit (ProducerSurplus) in the Long-Run.Select one:a. $1,000b. $2,500С.zero$2.000

A perfectly competitive firm has constant price so it is equal to marginal revenue. It maximizes…

23 $70 $60 - of $50 $40 $30 $20 -LRATC = LRMC $10 Demand = P MR $0 50 100 150 200 250 Output (Q) The diagram above shows the demand and cost curves for a market that could either be a monopoly or perfectly competitive in Long- in Total Profit (Producer Run Equilibrium. If the market above were Perfectly Competitive, each individual firm would earn Surplus) in the Long-Run. Select one: O a. $1,000 O b. $2,500 O c. zero O d. $2.000

23 $70 $60 - of $50 $40 $30 $20 -LRATC = LRMC $10 Demand = P MR $0 50 100 150 200 250 Output (Q) The diagram above shows the demand and cost curves for a market that could either be a monopoly or perfectly competitive in Long- in Total Profit (Producer Run Equilibrium. If the market above were Perfectly Competitive, each individual firm would earn Surplus) in the Long-Run. Select one: O a. $1,000 O b. $2,500 O c. zero O d. $2.000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PRICE (Dollars per subscription) 100 90 80 70 60 50 40 30 20 10 0 0 2 4 Pricing Mechanism Profit Maximization " 6 10 12 14 QUANTITY (Thousands of subscriptions) Marginal-Cost Pricing Average-Cost Pricing T 8 Complete the first row of the following table. MR O True O False Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. 16 Complete the second row of the previous table. ATC MC Complete the third row of the previous table. D 18 20 Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Long-Run Decision True or False: Over time, the internet service provider has a very strong incentive to lower costs when subject to average-cost pricing regulations.
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