What is the behavior of Marginal revenue, Average revenue and price under perfect competition? Also explain the relationship between AR and MR curve under monopoly
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Logically explain
(b) What is the behavior of Marginal revenue, Average revenue and price under
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- b. Suppose a price-discriminating monopoly has segregated its market into two submarkets and can prevent resale between the two. Assume that its marginal cost is constant and equal to its average total cost of $8. The firm's demand schedule for the first group is given by the first two columns of the following table. Output Price MR TR AR 24 1 22 20 3 18 4 16 5 14 12 7 10 8 8QUESTION 48 48. The Marginal Revenue curve facing a monopoly firm is O identical to its demand and average revenue curve. below its demand and average revenue curve. the same as it is for a perfectly competitive firm. perfectly elastic.If the demand curve faced by a firm is horizontal, then the firm is ________ and a ________. A. perfectively competitive; price taker B. a monopoly; price maker C. perfectly competitive; price maker D. a monopoly; price taker
- 3. The components of marginal revenue Jabari's HookNLadder is the only company selling fire engines in the fictional country of Alexandrina. Jabari initially produced seven trucks, but then decided to increase production to eight trucks. The following graph gives the demand curve faced by Jabari's Hook NLadder. As the graph shows, in order to sell the additional fire truck, Jabari must lower the price from $100,000 to $50,000 per truck. Notice that Jabari gains revenue from the sale of the additional engine, but at the same time, he loses revenue from the initial seven engines because they are all sold at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. PRICE (Thousands of dollars per fire engine) 275 250 225 200…Compared to a competitive firm, a monopoly will ... (select all correct answers) A. produce an output where marginal revenue is lower than marginal cost B. charge a higher price □ C. produce greater quantities OD. be less efficientThe following graph depicts the demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves for a firm operating as a natural monopoly. Costs and Revenues (dollars) 80 70 60 50 40 30 20 10 0 Market for a Natural Monopoly MC Quantity and ATC MR 10 20 30 40 50 60 70 80 90 100 D B ↑ Instructions: Enter your answers as a whole number. a. If the firm is operating as a natural monopoly, what is the profit-maximizing level of output and price charged to consumers? $ units will be sold b. At what price would the firm earn a normal profit? c. Suppose the government regulated the monopoly such that it were required to charge the perfectly competitive price. What is the regulated price?
- 3. The graph below shows a firm's demand, marginal revenue, and marginal cost curves. Find the profit-maximizing level of output and mark it q*. Find the price the firm should charge and mark it P*. P MC X D MR Quantity 4. The Whatsa Widget Company has a monopoly over the sale of widgets in a small midwestern town. The firm's demand, marginal revenue, marginal cost, and average cost curves are shown below. Find the firm's profit-maximizing level of output and the price the firm will charge. Is the firm earning a positive or a negative profit? Show the firm's profit (or loss) on the graph. P MC X MR D ATCThe following table provides information about long-run average cost curve of a firm: Quantity LRAC 100 50 200 43 300 39 400 39 500 44 600 52 a.This cost structure is an example of natural monopoly. b.For the first 300 units of output, this firm has diseconomies of scale. c.For output levels between 300 and 400, the firm has constant returns to scale. d.For output levels greater than 400, the firm has economies of scale. which is the answer?The graph illustrates the demand for haircuts and the costs of producing haircuts Draw a point at the profit-maximizing output and price if this industry is perfectly competitive Label the competitive equilibrium Ec Draw a point at the profit-maximizing output and price if the haircut producer is a single-price monopoly Label the monopoly equilibrium EM How do we redefine the curves in the graph when a perfectly competitive industry is taken over by a single firm? When a perfectly competitive industry is taken over by a single firm, the competitive industry's curve becomes the monopoly's OA. marginal revenue, demand OB. average total cost, supply. curve, 30 25 20- 15- 10- 0.0 Price and cost (dollars per haircut) MR 10 20 40 Quantity (thousands of haircuts) MC ATC D
- Question 3 The demand curve facing a monopoly firm is: O A. equivalent to the market demand curve. B. horizontal at the market equilibrium price. C. non-existent D. equivalent to the firm's marginal cost curve.1. Use the following demand schedule to determine total revenue and marginal revenue for each possible level of sales: table below: Product Price $2 2 2 2 2 2 Quantity Demanded 0 I 2 3 Total Revenue Marginal Revenue 4 5 you conclude about the struct or the industry in which firm is des. b. Graph the demand, total-revenue, and marginal-revenue curves for this firm c. Why do the demand and marginal-revenue curves coincide? d. "Marginal revenue is the change in total revenue associated with additional units of output." Explain verbally and graphically, using the data in the table.16 5 Use the table below to answer questions about Christina's Christmas Wreaths. Christina operates in a perfectly competitive market for wreaths. Christina's Costs and Revenue Quantity Average Variable (wreaths) Cost (dollars) 5 $14.00 6 - 15.00 7 CALL/M 16.00 8 22.00 9 28.00 10 34.00 wreaths Average Total Cost (dollars) $24.00 23.00 23.00 28.00 34.00 39.00 $ Instructions: In part a, enter your answer as a whole number. In parts b and c, round your answers to two decimal places. a. What is the profit-maximizing level of output for Christina's Christmas Wreaths? Marginal Cost (dollars) $20.00 b. What is the profit per unit if the profit-maximizing level of output is produced? $ olo L c. What is the total economic profit generated by producing the profit-maximizing output? $ % Marginal Revenue (dollars) $63.00 63.00 63.00 63.00 63.00 63.00 22.00 23.00 BIEL 63.00 82.00 TAO 84.00