Question

In: Economics

Suppose when a monopolist produces 300 units. Its selling price is $11 per unit, its marginal...

Suppose when a monopolist produces 300 units. Its selling price is $11 per unit, its marginal revenue is $8 per unit, its marginal cost is $9 per unit, and its average total cost is $6 per unit. What can we conclude about this monopolist?

A. It is not maximizing profit; it should produce more units

B. It is not maximizing profit; it should produce fewer units

C. It is maximizing profit; its current profit is $600

D. It is maximizing profit; its current profit is $900

E. It is maximizing profit; its current profit is $1,500

F. It is maximizing profit; its current profit is $3,300

Expert Solution

Since the monopoly profit maximizing condition

MR=MC

But in the current situation,

Monopoly

Output=300 units

MR=8

MC=9

ATC=6

Price=11

Profit=(P-ATC)Q

=(11-6)300

=5*300

=1500

Since at current level of output, MR is less than MC, so firm is not maximizing output.

So firm should decrease output, for maximizing profit.

Hence option B is the correct answer.

Rahul Sunny answered 2 years ago

QUESTION 11 What is the breakeven point in units with a selling price per unit of...

QUESTION 11 What is the breakeven point in units with a selling price per unit of $100, total fixed expenses of $250,000, and variable expense per unit of $50? a. 2500 units b. 7500 units c. 10,000 units d. 5000 units ---------- What inputs are used to calculate the flexible budget? a. Actual quantity X standard price b. Standard quantity allowed for actual output X Standard price c. Actual quantity X Actual price d. standard quantity X actual price -------------------...

A monopolist produces a product with a constant marginal cost equal to $400 per unit and...

A monopolist produces a product with a constant marginal cost equal to $400 per unit and a fixed cost of $80000. The demand for the product is Q= 500-0.5*P. The monopolist’s maximal profits are equal to a) $0.00 b) $5000.00 c) $45000.00 d) None of the above.

1) Suppose a single-price monopolist is selling more than one unit of a good for a...

1) Suppose a single-price monopolist is selling more than one unit of a good for a price of $19.95. Of the following choices, which is true? The marginal revenue of that unit must be less than $19.95 The marginal revenue of that unit must be $19.95 The marginal cost of that unit must be $19.95 The average cost of that unit must be $19.95. 2) BenFrank LLC is a monopolist that can sell 8,000 units of SKU972 at a price...

CVP Analysis Data Unit sales 20,000 units Selling price per unit $60 per unit Variable...

CVP Analysis Data Unit sales 20,000 units Selling price per unit $60 per unit Variable expenses per unit $45 per unit Fixed expenses $240,000 Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relationships Compute the CM ratio and variable expense ratio Selling price per unit ? per unit Variable expenses per unit ? per unit Contribution margin per unit ? per unit CM ratio ? Variable expense ratio ? Compute the...

22. Falcon Co. produces a single product. Its normal selling price is $27 per unit. The...

22. Falcon Co. produces a single product. Its normal selling price is $27 per unit. The variable costs are $18 per unit. Fixed costs are $19,200 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,350 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable...

1. Falcon Co. produces a single product. Its normal selling price is $25 per unit. The...

1. Falcon Co. produces a single product. Its normal selling price is $25 per unit. The variable costs are $16 per unit. Fixed costs are $20,400 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,320 units with a special price of $19 per unit. Falcon has the capacity to handle the special order, and for this order, a variable...

Data 4 Unit sales 30,000 units 5 Selling price per unit $60 per unit 6 Variable...

Data 4 Unit sales 30,000 units 5 Selling price per unit $60 per unit 6 Variable expenses per unit $30 per unit 7 Fixed expenses $810,000 What is the break-even in dollar sales? (b) What is the margin of safety percentage? (c) What is the degree of operating leverage? (Round your answer to 2 decimal places.) 3. Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating...

Sales per period 1,000 units Selling price $40 per unit Variable manufacturing cost $12 per unit...

Sales per period 1,000 units Selling price $40 per unit Variable manufacturing cost $12 per unit Selling expenses $5,100 plus 5% of selling price Administrative expenses $3,000 plus 20% of selling price note Note that some costs have variable components such as commissions on sales and shipping costs. The contribution margin ratio would be: A) 70%. B) 45%. C) 75%. D) 55%.

Suppose a monopolist charges a price of $27 for its product and sells 10 units at...

Suppose a monopolist charges a price of $27 for its product and sells 10 units at that price. At 10 units of production the firm has average fixed cost equal to $10 and average variable cost equal to $12. How much total profit is the firm earning at this price? (show your work)

A competitive firm sells its output for $20 per unit. When the firm produces 200 units...

A competitive firm sells its output for $20 per unit. When the firm produces 200 units of output, average variable cost is $16, marginal cost is $18, and average total cost is $23. (4 points) What is the firm’s total revenue, total cost, and profit at the 200units of production? What is the firm’s fixed cost for 200 units? Compare the firm’s profit or loss at 200 units of output to if the firm would shut down. Does it make...