As output increases, total revenue increases, but total costs
also increase. Why does the profit-maximizing level of production
occur at the point where marginal revenue equals marginal cost? Can
this same principle be applied to minimize a loss
True or False. Draw a graph (supply and demand diagrams) to support your answer:
Technological innovation benefits society because it increases the total revenue of the producers.
Total revenue for producing 10 units of output is $5. Total
revenue for producing 11 units of output is $9. Given this
information, the
Average revenue for producing 11 units is $2.
Average revenue for producing 11 units is $4
Marginal revenue for producing the 11th unit is $2.
Marginal revenue for producing the 11th unit is $4.
Output
Total Cost
0
40
1
80
2
110
3
130
4
160
5
200
6
250
7
320
Refer to the...
An increase in price will result in no change in total revenue
if: *
A) the percentage change in price is large enough to cause
quantity demanded to fall to zero.
B) the coefficient of elasticity is equal to zero.
C) the percentage change in quantity demanded is equal to the
percentage change in price (in absolute values).
D) the demand function is perfectly elastic.
Assume the demand for a good is price inelastic, i.e., ed <
1 (in absolute...
An increase in price will result in no change in total revenue
if: *
A) the percentage change in price is large enough to cause
quantity demanded to fall to zero.
B) the coefficient of elasticity is equal to zero.
C) the percentage change in quantity demanded is equal to the
percentage change in price (in absolute values).
D) the demand function is perfectly elastic.
Assume the demand for a good is price inelastic, i.e., ed <
1 (in absolute...
How would the following changes in price affect total revenue?
That is, would total revenue increase, decline, or remain
unchanged?
Price falls and demand is inelastic.
Price rises and demand is elastic.
Price rises and supply is elastic.
Price rises and supply is inelastic.
Price rises and demand is inelastic.
Price falls and demand is elastic.
Price falls and demand is of unit elasticity
At 110 units of output, marginal revenue is $6, the marginal
cost is $6, and the average cost is $5. If consumers demand 110
units of output when the price is $9, what is the expected
profit?
6. Explain the relationship between the elasticity and total
revenue. (Remember Total Revenue = Price x Quantity Sold)
11. After economic class one day, your friend suggests that
taxing tobacco would be a good way to raise revenue. In what sense
is taxing tobacco a "good" way to raise revenue? In what sense is
it not a "good" way to raise revenue?
Part 4: Calculate the total revenue and
marginal revenue for each output level. Your solution will need to
be in a table.
Part 5: Apply the economic decision rule to
determine the monopolists profit maximizing output level. Once you
have determined the output level, identify the price the monopolist
will charge.
Part 6: Calculate the consumer surplus,
producer surplus and deadweight loss under the monopoly.
Part 7. Assume that the monopolist can
perfectly price discriminate. What price does the monopolist...