Determine the profit-maximizing level of output and the associated profit-maximizing price. Use the grey rectangle (star symbols) to shade the area that represents the firm's total cost at this quantity. PRICE (Dollars per video game) 200 180 160 140 120 100 80 60 40 20 0 0 20 20 40 MR 60 80 100 120 140 160 180 200 QUANTITY (Thousands of Video games). D Total Cost video games) Evaluate the following statement: "If the firm chooses to follow the supply rule and produce where MR MC, demand is price elastic; so therefore, it is possible to increase profit by increasing output." That is correct. This is the exact reason that firms always operate on the price inelastic portion of the demand curve. O That is incorrect. Increasing output when demand is price elastic will only increase total revenue, not profit. O That is incorrect. In fact, firms should produce where MR is greater than MC to ensure that they earn positive profit. O That is correct. The profit maximum occurs where demand is unit elastic. 0 Grade It Now Save & Continue Continue without saving

Determine the profit-maximizing level of output and the associated profit-maximizing price. Use the grey rectangle (star symbols) to shade the area that represents the firm's total cost at this quantity. PRICE (Dollars per video game) 200 180 160 140 120 100 80 60 40 20 0 0 20 20 40 MR 60 80 100 120 140 160 180 200 QUANTITY (Thousands of Video games). D Total Cost video games) Evaluate the following statement: "If the firm chooses to follow the supply rule and produce where MR MC, demand is price elastic; so therefore, it is possible to increase profit by increasing output." That is correct. This is the exact reason that firms always operate on the price inelastic portion of the demand curve. O That is incorrect. Increasing output when demand is price elastic will only increase total revenue, not profit. O That is incorrect. In fact, firms should produce where MR is greater than MC to ensure that they earn positive profit. O That is correct. The profit maximum occurs where demand is unit elastic. 0 Grade It Now Save & Continue Continue without saving

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 2 Companies in an oligopoly market that decide to collude (cooperate): O a. Will set different prices. O b. Will share the monopoly profit. Oc. Will share the perfect competition profit. Od. Will have zero profit.
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