The following graph illustrates the market for small moving trucks in Bloomington, IN, during Indiana's fall move-in week.PRICE (Dollars per small truck)1009080708050403020100DemandI015,502 385 6 7QUANTITY (Hundreds of small trucks)Supply9 10?Suppose that SendIt is one of over a dozen competitive firms in the Bloomington area that offers moving truck rentals.Based on the preceding graph showing the weekly market demand and supply curves, the price SendIt must take as given is S 2. The demand curve facing a competitive firmThe following graph illustrates the market for small moving trucks in Bloomington, IN, during Indiana's fall move-in week.PRICE(Dollars per small truck)1009080 +70605040302010DDemand101232356BQUANTITY (Hundreds of small trucks)5,504O Supply curveSupplySuppose that SendIt is one of over a dozen competitive firms in the Bloomington area that offers moving truck rentals.9Based on the preceding graph showing the weekly market demand and supply curves, the price SendIt must take as given is SAverage revenue curve10Fill in the price and the total, marginal, and average revenue SendIt earns when it rents 0, 1, 2, or 3 trucks during move-in week.Quantity PriceTotal Revenue(Trucks) (Dollars per truck) (Dollars)Average Revenue(Dollars per truck)The demand curve faced by SendIt is identical to which of its other curves? Check all that apply.Marginal revenue curveMarginal cost curveMarginal Revenue(Dollars)

A perfectly competitive firm is a price taker, which means the price in the market is determined by the market forces at the intersection of market demand and the market supply curve. A perfectly competitive firm sells each unit of output at the market-determined price. Since the price remains the same at each level of output, the demand curve faced by a perfectly competitive firm is horizontal. The price at the intersection of market demand and the market supply curve is $50 per small truck. It means the market-determined price is $50 per small truck. Therefore, Sendit (a perfectly competitive firm) will take this price and sells each unit of output at a price of $50 per small truck. Based on the preceding graph showing the weekly market demand and supply curves, the price Sendit must take as given is $50 Quantity (Trucks) Price ($ per truck) Total revenue ($) Marginal revenue ($) Average revenue ($ per truck) 0 50 0 NA NA 1 50 50 50 50 2 50 100 50 50 3 50 150 50 50 Total revenue = Quantity * Price Marginal revenue = (change in total revenue / change in quantity) Average revenue = (Total revenue / quantity) ------------- As we see, the marginal revenue, average revenue, and price are the same at each level of output. Therefore, the demand curve faced by Sendit is identical to the marginal revenue curve and average revenue curve. Answer: Option (A) and (D), i.e., Marginal revenue curve and Average revenue curve

Answered: The following graph illustrates the…

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The following graph illustrates the market for small moving trucks in Bloomington, IN, during Indiana's fall move-in week. ollars per small truck) 100 90 80 70 60 50 S Demand 5,50 Supply ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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