Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 14, Problem 14.11P
a)
To determine
To know:
b)
To determine
Calculation of marginal and average cost from total cost.
c)
To determine
To calculate:Calculation of marginal and average cost from total cost.
d)
To determine
To plot:Graphical representation of average cost curve.
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Assume that the demand for electric cars is p = 100-q (where q is the quantity and p is the price), and that an innovation can reduce the constant marginal cost of production from 70 to 60.
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The following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR)
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20
18
Monopoly Outcome
16
14
12
10
8
ATC
MC
MR
2
3
5
7
8
10
QUANTITY (Hundreds of cubic feet)
Which of the following statements are true about this natural monopoly? Check all that apply.
The gas company is experiencing economies of scale.
The gas company must own a scarce resource.
It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.
The gas company is experiencing diseconomies of scale.
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True
False
D.
2.
PRICE…
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If you were to do exercise 1 in for every marginal change in price, you would find the marginal revenue curve. The marginal revenue diagram has been provided for the next exercises, along with the marginal costs for DeBeers.
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