Microeconomics
Microeconomics
11th Edition
ISBN: 9781260507041
Author: Colander, David
Publisher: MCGRAW-HILL HIGHER EDUCATION
Question
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Chapter 14.A, Problem 1QE

a)

To determine

The profit-maximizing level of price and output.

b)

To determine

The profit-maximizing level of output and price of a monopoly firm.

c)

To determine

Comparison between the results obtained in part (a) and part (b).

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Students have asked these similar questions
TRUE OR FALSE? A decreasing cost industry has a long run supply curve that is upward sloping.
Good Grapes is selling grapes in a purely competitive market. Its output is 5,000 pounds, which it sells for $5 a pound. At the 5,000-pound level of output, the average variable cost is $4.00, the marginal cost is $4.25, and the average total cost is $4.50 a pound. Should the firm increase output, decrease output, or not produce? Why? How should the firm determine the optimal level of output?
Consider a typical firm in a perfectly competitive industry. The firm has a total cost function of TC = 100 + 4q^2 (and thus MC= 8q). If the current market price is 50 then:    a. The firm will not shutdown in the short run but will leave the industry in the long run.    b. The firm will shutdown in the short run and will leave the industry in the long run.    c. The firm will not shutdown in the short run and will stay in the industry in the long run.* **    d. The firm will shutdown in the short run but will stay in the industry in the long run.    e. None of the above.    Why is the answer C? Please provide explanation of shut down points in the short run and long run with AVC, ATC, etc.
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