Total Cost Output (Bushels of Corn) Price $100 $75.00 12 $175 S69.00 42 $250 S54.00 56 $325 $47.00 66 $400 $42.00 74 $475 $38.00 80 S550 S35.00 84 $625 $33.00 87 $700 $31.50 Table 2: Total cost, prices, and output for monopolistic corn farm Now suppose that the same corn farm were to have a monopoly over corn. (Or perhaps they were able to convince consumers that their corn was unique, so the market may in fact be monopolistically competitive.) Table 2 lists the total costs and outputs from Table 1 as well as the market demand curve (prices) that the monopolistic farm faces. What is the profit-maximizing level of output for the farm now that they are a monopoly? Hint: You will not find a point where MR = MC exactly. Instead, think of it this way: the farm will increase output so long as MR > Mc. If the next level of output results in MR < MC, the firm should not produce that next level of output. Answer: In reference to the previous problem, should the monopolistic firm shut down in the long run? O a. Yes O b. No Oc. Not enough information

Total Cost Output (Bushels of Corn) Price $100 $75.00 12 $175 S69.00 42 $250 S54.00 56 $325 $47.00 66 $400 $42.00 74 $475 $38.00 80 S550 S35.00 84 $625 $33.00 87 $700 $31.50 Table 2: Total cost, prices, and output for monopolistic corn farm Now suppose that the same corn farm were to have a monopoly over corn. (Or perhaps they were able to convince consumers that their corn was unique, so the market may in fact be monopolistically competitive.) Table 2 lists the total costs and outputs from Table 1 as well as the market demand curve (prices) that the monopolistic farm faces. What is the profit-maximizing level of output for the farm now that they are a monopoly? Hint: You will not find a point where MR = MC exactly. Instead, think of it this way: the farm will increase output so long as MR > Mc. If the next level of output results in MR < MC, the firm should not produce that next level of output. Answer: In reference to the previous problem, should the monopolistic firm shut down in the long run? O a. Yes O b. No Oc. Not enough information

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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