Question
In: Economics
Show how the profit-maximizing graph would differ for a firm if the city does away with...
Show how the profit-maximizing graph would differ for a firm if the city does away with the medallion system and allows new firms to enter the taxi business at will which leads to a large number of new entrants.
Solutions
Expert Solution
New cab drivers will enter the market only if they are
cost-efficient enough to match the existing price P, which is the
minimum of MC of all firms in a competitive market.
They take the demand curve as horizontal - supply however much they
can for price P.
They decide their quantity Qc (taking price as exogeneous) such
that [ MC(Qc) = P ]
This is shown as the point of intersection between the horizontal (competitive market's) demand curve D2 and the marginal cost curve MC.
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Rahul Sunny answered 2 years agoRelated Solutions
Describe the Behavior of the Profit-Maximizing Firm. How does the firm account for costs? Define and...
Describe the Behavior of the Profit-Maximizing Firm. How does
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What would be the profit-maximizing price for the firm to
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What is RAROC? How does maximizing RAROC differ from maximizing ROE?
What is RAROC? How does maximizing RAROC differ from maximizing
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In a monopoly market, how does the profit-maximizing quantity compare to revenue-maximizing quantity? How does the...
In
a monopoly market, how does the profit-maximizing quantity compare
to revenue-maximizing quantity? How does the profit-maximizing
price compare to revenue-maximizing price? Why?
How do you find the profit maximizing PRICE (not level of output) on a graph for...
How do you find the profit maximizing PRICE (not level of
output) on a graph for a monopoly with demand, marginal revenue,
marginal cost, and average total cost curves.
Find the point where MR = MC and go straight over to the price
axis.
Find the point where demand hits marginal cost and go straight
over to the price axis.
Find the point where MR = MC, go straight up until you hit the
demand curve, and then go straight...
How do you find the profit maximizing PRICE (not level of output) on a graph for...
How do you find the profit maximizing PRICE (not level of
output) on a graph for a monopoly with demand, marginal revenue,
marginal cost, and average total cost curves.
Find the point where MR = MC and go straight over to the price
axis.
Find the point where demand hits marginal cost and go straight
over to the price axis.
Find the point where MR = MC, go straight up until you hit the
demand curve, and then go straight...
Please draw the graphs to show different profit-maximizing scenarios that a perfectly competitive firm will be...
Please draw the graphs to show different profit-maximizing
scenarios that a perfectly competitive firm will be facing with
different price levels. Shade the areas of profit or loss to
support your arguments
A) The Firm is operating and earns a positive profit.
B) The Firm is operating and earns 0 profit.
C) The Firm is operating but earns negative profit.
D) The Firm is indifferent between operating and shutting
down.
E) The Firm Shuts down.
Suppose the following graph represents a monopoly firm's situation: A. What would be the profit-maximizing level...
Suppose the following graph represents a monopoly firm's
situation:
A. What would be the profit-maximizing level of output for the
firm?
A firm offers a pick and drop facility for its workers. Why would a profit-maximizing firm...
A firm offers a pick and drop facility for its workers.
Why would a profit-maximizing firm opt for such a policy?
A firm offers a pick and drop facility for its workers. Why would a profit-maximizing firm...
A firm offers a pick and drop facility for its workers.
Why would a profit-maximizing firm opt for such a policy?
Explain in words.
Would the workers respond to this announcement? Show in a
standard diagram with wage on the x-axis and effort on the y-axis.
With the aid of the diagram you have drawn. Show what would happen
to the equilibrium wage and effort?
A firm offers a pick and drop facility for its workers.
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