Due to low barriers to entry, monopolistic competitive firms can earn ____________ in the long run. Accounting profit but not economic profit. Economic profit but not accounting profit. Both economic profit and accounting profit. Neither economic profit nor accounting profit
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Due to low barriers to entry,
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Accounting profit but not economic profit. |
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Economic profit but not accounting profit. |
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Both economic profit and accounting profit. |
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Neither economic profit nor accounting profit. |
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- In a perfectly competitive market, one of the following answers is correct with respect to the demand curve for a perfectly competitive firm. Which one? Group of answer choices The perceived demand curve is downward sloping. The perceived demand curve for a perfectly competitive firm and a monopolist look the same. When price increases, quantity demanded from the firm will also decrease. The demand curve is flat. Answer correct and explain within 40 mins will give you positive feedback.You are the manager of the local movie theatre in a small town. Running a movie has a fixed cost of $2,000, but selling an extra ticket (i.e. accommodating an extra viewer) has zero marginal cost. Below are the demand schedules for your two types of customers: Price $ Adults Teens and Seniors 10 50 9 100 8 200 7 200 50 6 300 100 5 350 150 4 400 200 3 400 300 400 300 1 400 300 If you are to charge a single price (i.e., if price discrimination is prohibited), what price would you set for a ticket to maximize profit? How much profit do you make? Price = $ Profit = $ If you were allowed to price-discriminate, what price would you charge for an adult ticket? For senior/teen ticket? How much profit do you make? Price for adults = $ Price for seniors/teens= $ Profit = $Joyce owns a gas station and monopolizes gas sales along a remote stretch of road. In February, Joyce stayed open even though she earned negative economic profits. Draw a correctly labeled graph for Joyce’s gas station during February and show each of the following. The profit-maximizing output and price, labeled QJ and PJ The average total cost curve, labeled ATC Deadweight loss, completely shaded What must have been true for Joyce to continue operating during the month of February even though she earned negative economic profit? Assume that fixed costs for Joyce’s gas station decrease. Would Joyce’s profit-maximizing quantity increase, decrease, or stay the same in February? Explain. During the month of July, demand increases so that Joyce now earns a positive economic profit. However, she realizes her profits would have been higher if she had reduced the price of gasoline. At the quantity sold in July, was marginal revenue greater than, equal to, or less than…
- You are managing a firm with market power, and you think the price elasticity of demand for your product is between 1.3 and 1.5. You estimate that your marginal cost is between $55 and $70. The price that you should set would range between $ and $. (Round your answers to two decimal places.) If you refine your estimate of the marginal cost to $80, the price you should set would now range between $ and $ (Round your answers to two decimal places.)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 $1,225Whether in the case of clothes and cars or in the case of universities, producers spend a lot of money establishing their "brand names" because: Group of answer choices Brand names are established by driving out the competition, after which these companies charge monopoly prices. Government legislation raises the prices of brand named items with price controls, and people have no choice but to pay the higher price for brand name products. There are legal requirements for companies with brand names to spend a percentage of their budget on advertising. Brand names carry a reputation of better quality, and consumers will pay a higher price for brand names.
- A firm with market power can divide its sales into two submarkets, the demands and marginal revenues of which are shown in the following diagram. $ Price, marginal revenue, and marginal cost (dollars) 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0 5 10 MRA 15 MRB 20 Quantity 25 DA 30 35 MC = ATC DB 40 (a) How many quantities of output should the firm produce? 1 45 Q (b) How many quantities should be sold to market A? How many quantities should be sold to market B? What price should be charged in each market? (c) Calculate the price elasticities at the prices charged in each submarket. Do these price elasticities have the expected relative magnitudes? Explain. (d) What is the amount of profit generated by the firm?Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. PRICE (Dollars per pound) 100 90 80 70 80 50 40 30 20 10 0 0 125 250 375 500 825 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Demand Because you know that competitive firms earn Supply (10 firms) True Supply (15 firms) If there were 10 firms in this market, the short-run equilibrium price of rhodium would be $ would . Therefore, in the long run, firms would False Supply (20 firms) per pound. From the graph, you can see that this means there will be ? per pound. At that price,…Limiting Market Power: Regulation and Anti-Trust Predatory pricing threatens to keep competitors out of the market. It is a price that is so low that it will be profitable for the firm that adopts it only if a rival is driven out of the market. Debate why predatory pricing is an economic inefficiency in a perfectly competitive.
- If an industry's long-run average total cost curve has a negative slope over an extended range of quantity (as shown on the diagram here), what is the most likely market structure for this industry? $ Long-run ATC Quantity The industry consists of firms of various sizes. The industry consists of many small firms. The industry is monopolistically competitive. The industry is monopolistic.Rebecca owns Louisiana Sugar Company, a manufacturer of sugar. Since there are lots of domestic manufacturers and importers of sugar and it is difficult to practice brand differentiation, the sugar industry is highly competitive. Suppose the demand for sugar increases. (1) What will be the effect on the market price and quantity of sugar in the short run and in the long run? Explain why. (2) What will happen to the economic profits of Louisiana Sugar Company in the short run and in the long run? Explain why.Suppose that you are a manager for a firm like EBC Brakes, which manufactures brakes for automobiles and motorcycles. Your company has two plants, one in the United States and the other in the United Kingdom. The following tables include estimated demand and marginal revenue for your brakes, along with the marginal costs at the two factories. what quantity and price maximize your firms profit? What is the profit – maximizing number of brakes produced in the U.S. plant? In the U.K. plant? Quantity Demanded (brakes per hour) Price (dollars per brake) Quantity Produced in the U.K. plant (brakes per hour) Quantity Produced in the U.S. (brakes per hour) Total Quantity Produced Marginal Cost (dollars per brake) Marginal Revenue (dollars per brake) 104 196 47 42 89 66 92 105 195 48 44 92 68 90 106 194 49 46 95 70 88 107 193 50 48 98 72 86 108 192 51 50 101 74 84 109 191 52 52 104…