Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Question
Chapter 15, Problem 1IP
(a)
To determine
Illustration of firm’s MR and MC and the possibility of equilibria.
(b)
To determine
The two equilibria at which firms will arrive at.
(c)
To determine
The effect of decreasing MC in product price.
(d)
To determine
The effect of increasing MC in product price.
(e)
To determine
Relevance of the kinked
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Students have asked these similar questions
A friend has just started up her own business. Her firm asks you how much to charge for her product to maximize profits. The demand schedule for it is given by the first two columns in the table below; its total costs are given in the third column. For each level of output, you can calculate total revenue, marginal revenue, average cost, and marginal cost. The profit-maximizing level of output can be found at the point where TR - TC is greatest, or where MR = MC, (or the last quantity where MR is still greater than MC.)
What is the profit-maximizing level of output for her product? 40
How much will she earn in profits? 80
Price Quantity TC TR? MR? MC?
$25.00 0 $130
$24.00 10 $275
$23.00 20 $435
$22.50 30 $610
$22.00 40 $800
$21.60 50 $1,005
$21.20 60 $1,225
Suppose that Tommy Hilfiger's marginal cost of a jacket is a constant $100 and at one of the firm's shops, total fixed
cost is $2,000 a day.
The profit-maximizing number of jackets sold in this shop is 20 a day.
When the shops nearby start to advertise their jackets, this Tommy Hilfiger shop spends $2,000 a day advertising
its jackets, and its profit-maximizing number of jackets sold jumps to 50 a day.
What happens to Tommy's markup and its economic profit? Why?
Tommy's markup
A. rises, falls, or remains unchanged depending on the effect of advertising on demand
OB. falls because advertising decreases demand
OC. rises because advertising increases demand
OD. does not change because advertising is generally ineffective
Search
In the short run, Tommy's economic profit
**
A. is unknown, zero
OB. decreases with advertising, zero
OC. increases with advertising, positive
OD. is unknown, positive
In the long-run, Tommy's economic profit is
Next
The figure below shows the demand (D, MR) and cost (MC, ATC) curves for the Hand Made Shirt Shop operating in the
monopolistically competitive personalized sweatshirts industry.
Price per unit
Number of personalized sweatshirts
MC
18
0
MR
D
50 70 75
Units of output
ATC
According to the figure above, what is the minimum fixed cost consistent with the firm choosing to remain open in the short run?
a. $1,150
b. The firm would continue to operate regardless of the level of fixed costs.
c. $1,250
d. $100
Chapter 15 Solutions
Microeconomics
Ch. 15.1 - Prob. 1QCh. 15.1 - Prob. 2QCh. 15.1 - Prob. 3QCh. 15.1 - Prob. 4QCh. 15.1 - Prob. 5QCh. 15.1 - Prob. 6QCh. 15.1 - Prob. 7QCh. 15.1 - Prob. 8QCh. 15.1 - Prob. 9QCh. 15.1 - Prob. 10Q
Ch. 15 - Prob. 1QECh. 15 - Prob. 2QECh. 15 - Prob. 3QECh. 15 - Prob. 4QECh. 15 - Prob. 5QECh. 15 - Prob. 6QECh. 15 - Prob. 7QECh. 15 - Prob. 8QECh. 15 - Prob. 9QECh. 15 - Prob. 10QECh. 15 - Prob. 11QECh. 15 - Prob. 12QECh. 15 - Prob. 13QECh. 15 - Prob. 14QECh. 15 - Prob. 15QECh. 15 - Prob. 16QECh. 15 - Prob. 17QECh. 15 - Prob. 18QECh. 15 - Prob. 1QAPCh. 15 - Prob. 2QAPCh. 15 - Prob. 3QAPCh. 15 - Prob. 4QAPCh. 15 - Prob. 5QAPCh. 15 - Prob. 1IPCh. 15 - Prob. 2IPCh. 15 - Prob. 3IPCh. 15 - Prob. 4IPCh. 15 - Prob. 5IPCh. 15 - Prob. 6IPCh. 15 - Prob. 7IP
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