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?

Expert Solution

Rahul Sunny answered 1 year ago

A) If a firm is a price taker its marginal revenue is: Constant Decreasing as quantity...

A) If a firm is a price taker its marginal revenue is: Constant Decreasing as quantity produced increases Increasing as quantity produced increases Zero B) If a non-price taking firm produces where demand is inelastic, marginal revenue will be... positive zero negative imaginary C) For non-price taking firms-- which of the following statements are true. The firms markup depends on the elasticity of demand for the firms product. The firms marginal revenue decreases as output increases. The firm's...

T/F If the marginal revenue is less than the marginal cost, a profit-maximizing price taker should increase its output.

13) T/F If the marginal revenue is less than the marginal cost, a profit-maximizing price taker should increase its output.14) T/F When a firm is operating in a price-taker market, marginal revenue is always less than the market price.15) T/F When an economist says a firm is earning zero economic profit, this implies that the firm will likely have to declare bankruptcy in the near future unless market conditions change.16) T/F In the year 2008, nearly three out of four...

A price-searcher firm wants to try a two part tariff. The firm’s marginal cost is a...

A price-searcher firm wants to try a two part tariff. The firm’s marginal cost is a constant $7.00 and it will charge that as the per unit price. To complicate things, the firm has two different groups of consumers. There are 30 consumers who have a demand function given by: qD = 15.25-0.25P. There are also 40 consumers who have a demand function given by qD = 30.5-0.5P. If the firm charges a fee that is too high, then it...

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.

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.

If price exceeds the minimum of average variable cost, then comparing marginal revenue to marginal cost...

If price exceeds the minimum of average variable cost, then comparing marginal revenue to marginal cost indicates how much additional profit is generated by the last unit of production and tells a firm whether it should increase output, decrease output or remain at the present level of output. True False If the firm’s marginal cost is equal to its marginal revenue at the firm’s existing level of production, then the firm should maintain its current level of production to maximize...

If price exceeds the minimum of average total cost, then comparing marginal revenue to marginal cost...

If price exceeds the minimum of average total cost, then comparing marginal revenue to marginal cost (x) tells a firm the total amount of profit that it will generate. (y) indicates how much additional profit is generated by the last unit of production. (z) tells a firm whether it should increase output, decrease output or remain at the present level of output. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and...

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?

(A) Explain using the terms marginal cost (MC) and marginal revenue (MR), how a company's supply...

(A) Explain using the terms marginal cost (MC) and marginal revenue (MR), how a company's supply are affected by a price increase. (B) Explain how a company's supply curve is reflected by the company's marginal cost (MC).

Which of the following statements are true about a competitive price-searcher market? Firms are not price...

Which of the following statements are true about a competitive price-searcher market? Firms are not price takers. Price equals average total cost in the long run. Firms earn positive profit in the long run. Firms are price takers.

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