1. Q* includes/excludes units whose cost (MC) is greater than their revenue (P). 2. Why? 3....

1. Q* includes/excludes units whose cost (MC) is greater than their revenue (P).

2. Why?

3. Q* includes/excludes units whose cost (MC) is less than their revenue (P).

4. Why?

5. Does Q* guarantee a maximum profit, minimized loss, to break-even or none/all of the above?

6. Why?

7. If profit is not possible, Q* certainly makes any losses smaller than FC.- true/false?

8. Why?

Expert Solution

1. True. The optimum level of quantity produced by the firm generally excludes the units for which cost is greater than their revenue because the cost incurred by the firm will exceed the revenue of the firm and thus firm will have to bear losses and thus excludes production of such units.

2. Q* includes the units for which cost or the marginal cost of production is less than their revenue. This is because by producing such units, the firm can earn profits because cost of the firm is less than price charged by the firm.

3. Q* at the level where MR of the firm is equal to MC of the firm guarantees maximum profit for the firm.

4. True. If the firm is not able to make profits, then Q* will make losses smaller than Fixed Cost because the firm can cover the variable cost of production and some portion of the fixed cost as price is greater than moinimum point of the Average Variable cost of the firm and thus will continue its production.

Rahul Sunny answered 1 year ago

Suppose that a monopolist whose marginal cost curve is MC(Q)=Qfaces the demand curve P=10-2Q.

Suppose that a monopolist whose marginal cost curve is MC(Q)=Q faces the demand curve P=10-2Q. What is monopolist's profit-maximizing quantity, profit-maximizing price, the total surplus (under monopoly profit maximization), also called the "monopoly market surplus," and if the monopolist can perfectly price discriminate, then deadweight loss equals...?

Why is the burden of a tax to taxpayers greater than the revenue received by the...

Why is the burden of a tax to taxpayers greater than the revenue received by the government? Should wealthy taxpayers pay more taxes than poor taxpayers? Defend your argument.

P q TC MC 1 60 35 2 85 25 3 35 50 4 55 The...

P q TC MC 1 60 35 2 85 25 3 35 50 4 55 The TR for 2 units of output is equal to__________ dollars. The MR for the 3rd unit of output is equal to__________ dollars. The marginal profit of the first unit of output is equal to__________ dollars. The price of the second unit of output is equal to__________ dollars. The TVC for 3 units of output is equal to__________ dollars. The TC of 3 units of...

1. Demand: P=120-Q Total Cost: TC=Q2 Marginal Revenue: MR=120-2Q Marginal Cost: MC=2Q What is the amount of profit...

1. Demand: P=120-Q Total Cost: TC=Q2 Marginal Revenue: MR=120-2Q Marginal Cost: MC=2Q What is the amount of profit for this monopolist? 2. Demand: P=120-Q Total Cost: TC=Q2 Marginal Revenue: MR=120-2Q Marginal Cost: MC=2Q For this monopolist, the profit-maximizing price is ________ and the profit-maximizing quantity is _________. 3. Demand: P=120-Q Total Cost: TC=Q2 Marginal Revenue: MR=120-2Q Marginal Cost: MC=2Q Compared to perfect competition where P=MC, what is the amount of deadweight loss caused by this monopolist _________.

What is the marginal revenue (MR) and marginal cost (MC) as a function of Q? At what quantity is

The Company X has a monopoly on the beer market. Market demand is given by ?? = 200 - 4? and the company's short-term cost as a function of ? is given by ? (?) = ?2 + 40What is the marginal revenue (MR) and marginal cost (MC) as a function of Q? At what quantity is ?? = ???

Test whether p 1 greater than p 2. The sample data are x 1 equals 124,...

Test whether p 1 greater than p 2. The sample data are x 1 equals 124, n 1 equals 259, x 2 equals 139, and n 2 equals 305. Determine test statistic and P value

Pickup (Q) Price/Pickup Total Revenue (TR) Marginal Revenue (MR) Total Cost (TC) Marginal Cost (MC) Average...

Pickup (Q) Price/Pickup Total Revenue (TR) Marginal Revenue (MR) Total Cost (TC) Marginal Cost (MC) Average Total Cost (ATC) 0 $4.20 0 --- $3.20 --- --- 1 $3.80 $4.20 2 $3.40 $5.60 3 $3.00 $7.80 4 $2.60 $10.40 5 $2.20 $13.40 6 $1.90 $16.80 Complete the table above, then answer the following questions What are the fixed costs per month of garbage collection per resident? Explain your answer Considering that the current garbage collection firm the city has contracted with...

what is relationship between total revenue and cost if the price is greater than ATC (...

what is relationship between total revenue and cost if the price is greater than ATC ( is TR greater, less, or equal to TC)? Dies the firm make positive economic profit or loss?

1) If MC = 5 + Q and and MWTP = 20 –2 Q What is...

1) If MC = 5 + Q and and MWTP = 20 –2 Q What is the consumer and producer surplus in the market equilibrium? 2 ) The marginal net benefits of production are given by marginal willingness to pay minus the marginal costs of production (this is the net benefit from producing one additional unit). The area under the marginal net benefit curve is the sum of producer and consumer surplus. The marginal net benefits are given by MNB...

For a monopolist: Price is greater than marginal revenue. Marginal revenue equals zero. Marginal cost equals...

For a monopolist: Price is greater than marginal revenue. Marginal revenue equals zero. Marginal cost equals zero. Average total cost equals marginal cost.

Question