Write a short journal that addresses the following concepts: incremental cash flow; sunk cost; opportunity cost; externality ; cannibalization; stand-alone risk; sensitivity analysis; base-case NPV; scenario analysis; base-case scenario; worst-case scenario; best-case scenario.

The most important measure for controlling digital media investments is

If a regulatory authority requires a decreasing-average-cost natural monopoly to charge its average cost and produce the quantity demanded at that price, the monopolist will likely not be able to cover all of its economic costs (including opportunity costs).

A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product:

Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5

a) suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output?

b) suppose that a tax of $5 for each unit produced is imposed by state government. What is the price maximizing price?

A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 ; MR = 100-Q ; TC = 5Q ; MC = 5

a) Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output?

b) Suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing price?

c) Suppose that a tax of $5 for each unit produced is imposed by state government. How much profit does the monopolist earn?

If marginal cost exceeds marginal revenue, the firm

A)should reduce its average fixed cost in order to lower its marginal cost.

B)may still be earning a positive accounting profit

C)should increase the level of production to maximize its profit.

D)is most likely to be at a profit-maximizing level of output.

Who is a price taker in a competitive market?

A)both buyers and sellers

B)buyers only

C)sellers only

D)neither buyers nor sellers

For a competitive firm,

A)total cost equals marginal revenue.

B)average revenue equals marginal revenue.

C)total revenue equals average revenue.

D)total revenue equals marginal revenue

In the short-run, a firm's supply curve is equal to the

A)average total cost curve above its marginal cost curve.

B)marginal cost curve above its average total cost curve.

C)average variable cost curve above its marginal cost curve.

D)marginal cost curve above its average variable cost curve.

When marginal revenue equals marginal cost, the firm

A)Should increase the level of production to maximize its profit

B)must be generating positive economic profits

C)should cease producing

D)must be generating positive accounting profits.

Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

A)total cost of production.

B)fixed cost of production.

C)marginal cost of production.

D)average total cost of production.

At the profit-maximizing level of output,

A)marginal revenue equals average variable cost.

B)marginal revenue equals average total cost.

C)average revenue equals average total cost.

D)marginal revenue equals marginal cost.

If firms are competitive and profit maximizing, the price of a good equals the

A)fixed cost of production.

B)marginal cost of production.

C)average total cost of production.

D)total cost of production.

True/false. In the long-run, if price is above average fixed cost but below average total cost a firm should stay in the market.

True/false. Total cost divided by output is marginal cost.

True/false. In the long-run, firms in a competitive market earn zero profit and the market price is set such that each individual firms' average total cost is minimized.

True/false. The average fixed cost curve never increases as quantity increases.

True/false. The marginal cost curve passes through the minimum point of the AVC and ATC curves.

True/false. The money spent on four acres of land is an example of a fixed cost, whereas money spent on renting a warehouse is a variable cost.

Marginal cost, MC, and average total cost, ATC, become equal when MC is at its minimum point. True or False

A competitive constant-cost industry is made of identical firms producing q. The short run cost function of a representative firm is C(q)=1/2q²-10q +200. Market demand is given by: Q_d=1500-50P.

a) For what level of q is average cost minimized?

b) What is the market equilibrium price that achieves the long-run equilibrium of zero-profit? How many units is each firm producing?

c) How many units clear the market at that price? how many firms are there in the market?

d) write an equation for the long-run supply curve for this industry.