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Explain with the use of examples the difference between the following concepts:
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- The demand curve and marginal revenue curve for a firm's products are given as: P = 156 - 0.2Q and MR = 156 - 0.4Q. The firm's marginal cost and average total cost of production are constant at 50/unit. The graph of the demand curve, marginal revenue, marginal cost, and average total cost of production are shown below. 156 103 MC-AC 50 MR 265 390 780 A. What is the firm's profit-maximizing output level? In no more than three sentences, explain why profit is maximum at this output level. B. At what (single) price should the firm sell its products to maximize profit? C. How much profit can the firm earn at the profit-maximizing output level? D. If the firm uses fırst-degree price discrimination, determine the firm's output level, total revenue, total cost, and profit. E. In no more than three sentences, explain what first-degree price discrimination means.For a given commodity and pure competition, the number of units produced and the price per unit are determined as the coordinates of the point of intersection of the supply and demand curves. Given the demand curve p = 90 - and the supply curve p = 50+, find the consumer surplus and the producer surplus. 10 consumer surplus $ producer surplus $ Illustrate by sketching the supply and demand curves and identifying the surpluses as areas. P 100 80 60 40 20 P 120 100 80 60 Producer Surplus Consumer Surplus 100 200 300 Producer Surplus DO P 100 80 60 40 20 P 120 100 80 60 Consumer Surplus Producer Surplus 100 200 300 Consumer Surplus →Tom, a math major, examines Jane's economics class notes and observes that when price-taking firms earn economic profit, they do not seem to produce a quantity that minimizes theircosts. Is he correct?Is there significance to this observation?
- On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.Consider the competitive market for ruthenium. Assume that no matter how many firms operate in the industry, every firm is identical and faces the same marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves plotted in the following graph. 80 72 56 · ཉི་ ཀ་ཇཱ་སྐ་ན་ COSTS (Dollars per pound) AVC 16 MC- 8 ATC B 12 16 20 24 28 QUANTITY (Thousands of pounds) 36 The following graph plots the market demand curve for ruthenium. ? Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 20 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 30 firms. PRICE (Dollars per pound) 80 72…Questions 1-3 use the following case to determine a way to take a single product, like toilet and bundle it in such a way as to extract all of the profit at the time of the initial sale. You go to CostCo or Walmart and you see paper towel sold in a bundle and you wonder how the retailer can make any money. You do a little research and you find that the demand for paper towels is depicted by the following demand curve and marginal cost: P=$2.20 (1/10)*Q MR-$2.20 (2/10)*Q MC 0.20 where P is the price of paper towels, MC is the marginal cost of paper towels, MR is the marginal revenue of paper towels and Q is the quantity of paper towels. So you decide to try two different pricing strategies: 1) sell one roll at a time and 2) use multipart pricing to sell a bundle. Given the results for the pricing strategies in problems 1 and 2, what is your pricing decision and why?
- 3. Problems and Applications Q3 Consider total cost and total revenue, given in the following table: In the final column, enter profit for each quantity. (Note: If the firm suffers a loss, enter a negative number in the appropriate cell.) Total Cost Marginal Cost (Dollars) Total Revenue Marginal Revenue (Dollars) Profit Quantity (Dollars) (Dollars) (Dollars) 6 2 7 2 7 10 14 3 7 3 13 21 7 4 17 28 7 7 5 24 35 7 6 32 42 10 7 7 42 49 In order to maximize profit, how many units should the firm produce? Check all that apply. U 3 4. 6. ONIf marginal revenue is $9, how much output will the firm produce, and how much profit will it make? Show your calculations.3. Price and output decisions for a monopolist II BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Imagine that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximising price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE AND COST PER UNT (Dollars per can) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 + 0.50 MC 0 0 ATC 2.0 MR 4 D 0.5 1.0 1.5 2.5 3.0 3.5 4.0 QUANTITY OF OUTPUT (Thousands of cans of beer) + Monopoly Outcome Profit Loss ? Imagine that BYOB…
- Evaluate and explain the following statement: The market system is a profit-and-loss system.The graph attached illustrates the Demand, Marginal Revenue, Marginal Costs, Average Total Costs and Average variable Cost curves for a firm in a perfectly competitive market. What is the Optimum level of the output for the firm and what is the maximum price the firm can charge? How do you know? At this price and output combination does the firm make economic profit of economic loss? Explain your answer. Calculate the economic profit or loss? Show your calculations.Economists identify competitive markets as having these characteristics: • Identical products • price taker • low economic profits In preparation for the next module in which we will study the majority of markets that do not have these characteristics, based on your experience as a consumer what is a market for one good or service for which these characteristics do not hold? In your post, describe the good or service (not a brand name or company but the good or service itself) then explain why one or more of these characteristics is not true.