Identify and describe in detail the various short-run cases firms may find themselves in using the marginal-revenue-marginal-cost approach.

Expert Solution

Rahul Sunny answered 2 years ago

1.Marginal profit is equal to marginal revenue plus marginal cost. True or false Spacely Sprockets' short-run...

1.Marginal profit is equal to marginal revenue plus marginal cost. True or false Spacely Sprockets' short-run cost curve is C(q,K)=25q2K+15KC(q,K)=25q2K+15K, where q is the number of Sprockets produced and K is the number of robot hours Spacely hires. Currently, Spacely 2.hires 10 robot hours per period. The short-run marginal cost curve is MC(q,K)=50qKMC(q,K)=50qK. If Spacely receives $250 for every sprocket he produces, his profit maximizing output level is 50. True or False 3.Consider a competitive market in which the market...

Explain how marginal revenue product is derived. Why is the MRP curve also the firms' short-run...

Explain how marginal revenue product is derived. Why is the MRP curve also the firms' short-run the demand curve for labor? Explain why and how the demand curve for labor differs between firms operating in a competitive industry and an imperfectly competitive industry (i.e., monopoly).

Which of the following statement is true? The entire marginal cost curve becomes the firms short-run...

Which of the following statement is true? The entire marginal cost curve becomes the firms short-run supply curve. Market demand is infinitely elastic in all competitive industries. The average variable cost curve represents the short run supply curve for competitive firms. -- Normal profits are a cost of production. (I chose this one. Is this right?) Competitive firms can earn no economic profits during the short run period of time.

Compare price taker firms with price searcher firms in terms of marginal cost and marginal revenue....

Compare price taker firms with price searcher firms in terms of marginal cost and marginal revenue. How would each type firm use those concepts in decision making?

Both competitive market firms and monopoly market firms use the same marginal cost equals marginal revenue...

Both competitive market firms and monopoly market firms use the same marginal cost equals marginal revenue rule to select profit maximizing output, but economists argue that the profit maximizing behavior of competitive firms leads to a socially efficient allocation of resources but that the profit maximizing behavior of a monopoly leads to an inefficient allocation of resources. Explain.

Draw the graph for a monopoly with demand, marginal revenue, and marginal cost curves. Identify the...

Draw the graph for a monopoly with demand, marginal revenue, and marginal cost curves. Identify the profit-maximizing output level (Qm) and price (Pm). Suppose the monopolist sells Qm units of output at the regular price and then puts the product on sale at a lower price, Ps. Show the new price and quantity. Identify the consumer surplus of the additional sales. What happens to the firm’s profits and Does price discrimination lead to a more efficient or less efficient outcome?...

Firms maximize profit by setting marginal revenue (MR) equal to marginal cost (MC). Assuming that the...

Firms maximize profit by setting marginal revenue (MR) equal to marginal cost (MC). Assuming that the MR curve is downward sloping and the MC curve is upward sloping, explain why is it not profit maximizing for a firm to be operating at an output level where MC is not equal to MR?

In using the graph for a monopolist, with demand, marginal revenue, marginal cost, and average total...

In using the graph for a monopolist, with demand, marginal revenue, marginal cost, and average total cost curves, explain how you find the profit maximizing level of output. (Note that this question asks about OUTPUT. The next question asks about PRICE.) Profits are maximized at the quatnity where total revenue is highest above total cost Profits are maximized at the quantity where ATC hits its minimum Profits are maximized at the quantity where marginal revenue equals marginal cost Profits are...

Q1:What is the relationship between marginal product and marginal cost in short run? Q2:What is the...

Q1:What is the relationship between marginal product and marginal cost in short run? Q2:What is the effect or application of elasticity of demand in real life business? Q3:application of economics in any other fields such as health economics, industrial economics, agricultural economics, choice of cheapest technology out of many? Q4:why do businesses charge different prices for the same product or service... rationale? Q5:If I have a salon, what the best way on economic to get more profit?! Q6:What is the...

(b) If you drew a firms short run and long run cost curves in the same...

(b) If you drew a firms short run and long run cost curves in the same graph, the short run cost curve would always be above the long run cost curve, except at one level of output. Why? What is special about this level of output? (c) On a carefully labeled diagram, illustrate the cost minimizing bundle A for a firm with cobb-douglas technology. Now consider an increase in the quantity target to some point B. Draw the new bundle...

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