PRIN OF MICROECONOMICS
2nd Edition
ISBN: 9780393914085
Author: coppock
Publisher: Norton, W. W. & Company, Inc.
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Chapter 10, Problem 7SP
To determine
Explain the concept of elasticity and
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In the following table, which contains the demand schedule for a monopolist, enter the total revenue (TR) and marginal revenue (MR) for each price. For each price–quantity combination (that is, table row), indicate whether demand is elastic, unitary elastic, or inelastic at that point on the demand curve.
Hint: Do not calculate the price elasticity of demand mathematically. Instead, use what you know about elasticity along different segments of a linear demand curve to determine the elasticity of each price–quantity combination.
Use the following demand schedule for a pure monopolist to calculate total revenue and marginal revenue at each quantity. Plot the monopolist’s demand curve and marginal-revenue curve, and explain the relationships between them. Explain why the marginal revenue of the fourth unit of output is $3.50, even though its price is $5. What generalization can you make as to the relationship between the monopolist’s demand and its marginal revenue? Suppose the marginal cost of successive units of output was zero. What output would the single-price monopolist produce, and what price would it charge?
Hi! I got stuck with my microeconomics homework. Can you please help? Here's the problem:
A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units it must lower the price of its output from $2 to $1. Calculate the quantity effect and the price effect. Use these results to calculate the monopolist’s marginal revenue of producing the 9th unit. The marginal cost of producing the 9th unit is positive. Is it a good idea for the monopolist to produce the 9th unit?
It is from Microeconomics: Canadian Edition
by Paul Krugman; Robin Wells; Iris Au; Jack Parkinson
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