Use the following scenario to answer the next two questions. In 2021, three firms (Firm A, Firm B, and Firm C) were offering tax preparation services in a small town for a price of $300 per annual return. Each firm serviced customers; thus, all firms together serviced a total of 300 customers. Assume marginal cost is $100 for all firms. In 2022, Firms A and B each continued to servi 100 customers, but Firm C now serviced 150 customers; thus, all firms together serviced a total of 350 customers. All firms now charge $275 per return. Firm C's monthly profit increased by $6,250. due only to the output effect and decreased by due only to the price effect, for a net increase of Oa. $12,000; $5,050 O b. $13,000; $6,750 Oc. $9,500; $3,250 Od. $10,000; $3,750 Oe. $11,500; $5,250
Use the following scenario to answer the next two questions. In 2021, three firms (Firm A, Firm B, and Firm C) were offering tax preparation services in a small town for a price of $300 per annual return. Each firm serviced customers; thus, all firms together serviced a total of 300 customers. Assume marginal cost is $100 for all firms. In 2022, Firms A and B each continued to servi 100 customers, but Firm C now serviced 150 customers; thus, all firms together serviced a total of 350 customers. All firms now charge $275 per return. Firm C's monthly profit increased by $6,250. due only to the output effect and decreased by due only to the price effect, for a net increase of Oa. $12,000; $5,050 O b. $13,000; $6,750 Oc. $9,500; $3,250 Od. $10,000; $3,750 Oe. $11,500; $5,250
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
ChapterB: Differential Calculus Techniques In Management
Section: Chapter Questions
Problem 10E
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Transcribed Image Text:Use the following scenario to answer the next two questions.
In 2021, three firms (Firm A, Firm B, and Firm C) were offering tax preparation services in a small town for a price of $300 per annual return. Each firm serviced
customers; thus, all firms together serviced a total of 300 customers. Assume marginal cost is $100 for all firms. In 2022, Firms A and B each continued to servi
100 customers, but Firm C now serviced 150 customers; thus, all firms together serviced a total of 350 customers. All firms now charge $275 per return.
Firm C's monthly profit increased by
$6,250.
due only to the output effect and decreased by
due only to the price effect, for a net increase of
Oa. $12,000; $5,050
O b. $13,000; $6,750
Oc. $9,500; $3,250
Od. $10,000; $3,750
Oe. $11,500; $5,250
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