4) According to Kinked Demand theory a) Firms incur losses b) Firms have less revenue c) An increase in price by the firm is not followed by others d) None of the above
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Subject: Menagerial economics & policy
MCQ's
4) According to Kinked Demand theory
a) Firms incur losses
b) Firms have less revenue
c) An increase in
d) None of the above
5) If AFC is 40 and
a) 40
b) 120
c) 100
d) None of the above
6) The following statement about MC and AC is correct
a) "When MC is falling , AC is falling "
b) AC equals MC at MCs lowest point
c) "When MC exceeds AC, AC must be rising "
d) "When AC exceeds MC, MC must be rising "
Step by step
Solved in 2 steps
- 10. Figure 5 shows the graph of the short-run cost curves for Tim-T-Shirts, a firm operating in a perfectly competitive market. P* denotes the current price for Tim T-Shirts. Based on the information in the graph, which of the following should we expect in the long run? a) New firms will enter the market. b) The number of firms in the market will remain unchanged. c) Gray Sweaters will increase the current price of sweaters. d) There is not enough information to answer the question. Figure 5 Price and Costs P* MC ATC AVC Quantity1.i) Assuming you are the managing director of a firm that produces goods: A,B and C .The price elasticity of demand for A is 1.2, for B it is 1.oo and C is 0.75. It is known that he's firm is experiencing serious cash flow problems and you have to increase total revenue as soon as possible. If you were in a position to set the prices for these goods, what would be your pricing strategy for each product ii) price falls from N$ 16 to N$ 12 per bottle and demand rises from 200 to 300 per bottle.calculate the PED using midpoint formula Output prices average (total)cost Total cost marginal cost Total profit/loss 10 10 -108 20 10 4 -48 30 10 5 3 40 10 6.20 40 50 10 8 60 60 10 10 60 2. i) fill in the gaps ii)in which market structure doess Johnson Electronics (Pty)Ltd operate? iii)what level of output maximizes the firms profitSuppose that the market for chicken momos is perfectly competitive with ten firms producing momos. Tasty treat is one of the ten price-takers in the market for momos. The accompanying tables show the demand schedule for momos in Dhaka and cost schedule for "Tasty Treat". DEMAND SCHEDULE Price (BDT per plate) Quantity demanded (plate per hour) 10 900 25 675 30 600 40 450 50 300 70 0 COST SCHEDULE OF TASTY TREAT Output (plate per hour) Marginal Cost (BDT per extra plate) Average Variable Cost (BDT per plate) Average total cost (BDT per plate) 40 20 25 90 50 10 10 75 60 30 20 55 70 50 23 50 80 70 35 60 90 85 50 77 a) What is the value of the shut-down price and break-even price for Tasty Treat?How did you figure that out?b) Write down the individual supply schedule of chicken momos for Tasty Treat and the industry supply schedule for chicken momos.c) Plot the market demand and supply curves for chicken momos and find the equilibrium price and…
- HOW STARBUCKS USES PRICING STRATEGY FOR PROFIT MAXIMIZATION In January 2020, Starbucks raised their beverage prices by an average of 1% across the U.S, a move that represented the company’s first significant price increase in 18 months. I failed to notice because the price change didn’t affect grande or venti (medium and large) brewed coffees and I don’t mess with smaller sizes, but anyone who purchases tall size (small) brews saw as much as a 10 cent increase. The company’s third quarter revenue rose 25% to $417.8 million from $333.1 million a year earlier, and green coffee prices have plummeted, so what gives? Starbucks claims the price increase is due to rising labor and non-coffee commodity costs, but with the significantly lower coffee costs already improving their profit margins, it seems unlikely this justification is the true reason for the hike in prices. In addition, the price hike was applied to less than a third of their beverages and only targets certain…(b) You are the CEO for a lightweight compasses manufacturer. The demand function for the lightweight compasses is given by p = 40 – 4q²where q is the number of lightweight compasses produced in millions. It costs the company $15 to make a lightweight compass. (i) Write an equation giving profit as a function of the number of lightweight compasses produced. (ii) At the moment the company produces 2 million lightweight compasses and makes a profit of $18,000,000, but you would like to reduce production. What smaller number of lightweight compasses could the company produce to yield the same profit? Problem зAudio and hints Each spring, the town of Kitefield has a festival of kites. One year, newcomers arrive in Kitefield and establish a kite- production faality. Their presence shifts the supply curve to S2. As a result of the new competition, the Kitefield town council is concemed about a possible loss of income to the long-established kite makers in town. To protect their income, the council passes an ordinance forbidding the sale of kites at any price BELOW $18. Kite Demand and Supply Price 15 Floor 10 GID GS 200 00 400 200 Quantity of Kites 1. Analyze the effect of Kitefield's new ordinance or policy. a. Describe the type of policy enacted (Floor or Ceiling). b. Describe the problem it creates (Surplus or Shortages). C. Explain what causes the problem identified in part b d. Explain how the policy in part A caused the problem in part B Price per Kite
- The following graph plots daily cost curves for a firm operating in the competitive market for fitness trackers. Hint: Once you have positioned the rectangle on the graph, select a point to observe its coordinates. PRICE(Dollars pertracker) 100 90 70 60 50 40 20 10 0 0 MO ATC AVC 50 60 70 80 10 20 30 40 QUANTITY (Thousands of trackers per day) 90 100 Profit or Loss In the short run, given a market price equal to $45 per tracker, the firm should produce a daily quantity of trackers. On the preceding graph, use the blue rectangle (circle symbols) to fill in the area that represents profit or loss of the firm given the market price of $45 and the quantity of production from your previous answer. Note: In the following question, enter a positive number regardless of whether the firm earns a profit or incurs a loss. The rectangular area represents a short-run thousand per day for the firm.Please solve Fast i give 2 like Which of the following is not true according to Figure 1? Hide Transcribed Text Figure 1: Cost and Price AC : Average Cost, AVC: Average Variable Cost, and MC: Marginal Cost A) The firm earn a zero economic profit when it produces 40 unit at the price of $5.7 per unit. B) The minimum acceptable price (the shut-down point) is $4.3 per unit. C) The firm's supply curve is its MC curve above minimum of AVC. D) The firm earns an economic profit when the price exceeds $4.3 per unit.Answer the question on the basis of the following demand and cost data for a specific firm Demand Data (2) Price $10.00 (1) Price $ 11.50 11.00 10.50 10.00 9.60 9.10 8.30 Multiple Choice O 10 units 11 units 9 units 8.85 8.00 7.00 6.10 5.00 4.15 8 units (3) Quantity 6 7 8 9 10 11 12 Output 6 7 8 9 10 Cost Data 11 12 If columns (1) and (3) of the demand data shown are this firm's demand schedule, the profit-maximizing level of output will be Total Cost $61 62 64 67 72 79 86
- Refer to the accompanying figure to answer the following questions 1) the profit maximizing price and quantity are _______, respectively. 2) the total revenue when the firm is profit maximizing is_____. 3)the total cost when the firm is profit maximizing is _____. 4)the profit when the firm is profit maximizing is_____. (Please solve all of the subparts 1 to 4. I am willing to give it a thumbs up Thanks)Suppose that the turkey industry is in long-run equilibrium at a price of $5 per pound of turkey and a quantity of 150 million pounds per year. Suppose that WebMD claims that the bacteria found in turkey will decrease your expected life span by 4 years. WebMD's claim will cause consumers to demand Shift the demand curve, the supply curve, or both on the following diagram to illustrate these short-run effects of WebMD's claim. PRICE (Dollars per pound) 10 9 8 3 2 1 0 0 30 turkey at every price. In the short run, firms will respond by 60 Supply Demand 90 120 150 180 210 240 270 300 QUANTITY (Millions of pounds) Demand Supply (?3. A local firm produces three types of pizza, for delivery to homes in the area. The owners have completed research, to discover the demand curves for each of the three pizzas. The schedules are shown below: (Quantities are per week). Price Pizza A (Qd) Pizza B (Qd) Pizza C (Qd) 12 800 100 11 840 200 10 880 400 300 9. 920 800 400 8 960 1200 500 1000 1600 600 1040 2000 700 1080 2400 800 Plot the three demand curves, on one graph. a) Calculate the Market demand for Pizza. b) Calculate Price Elasticity of Demand for all three pizzas over the price range £9 to £10. c) For pizza C only, what price must be charged if the firm wishes to maximize its sales revenue? II