13) Economic efficiency requires that a natural monopoly’s price be a. equal to the lowest price the firm can charge and still make a normal profit. b. equal to average variable cost (AVC) where the AVC curve intersects the demand curve. c. equal to average total cost (ATC) where the ATC curve intersects the demand curve. d. equal to marginal cost (MC) where the MC curve intersects the demand curve.

A price taking firm faces a price of 30$, and has a marginal costs given by MC = q+5

A) Draw the demand curve faced by the firm and its marginal cost curve in a graph, calculate and show the optimal level of output for the firm

B) What are the variable costs of this firm at the profit maximizing level of output

C) What is the producer surplus of the firm

In a perfectly competitive market structure, a competitive firm has the given price as a price taker and, therefore, its price is equal to its MR shown on the same demand curve as the perfectly elastic demand curve. On the other hand, a monopoly firm has a downward sloping demand curve and its equilibrium price is always larger than MR (P>MR). Briefly explain why? Use both equation and diagram.

Given the price elasticities and price changes for the following products A–E in the table below, show how much the quantity will change (indicating an increase or decrease) and what effect this will have on total revenue (indicating an increase or decrease). Round your answers to 1 decimal place.

Question 214 pts

If the world price is above the domestic “no-trade” equilibrium price, then with international trade, the shortage caused in the domestic market can be met by foreign imports.

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Question 224 pts

Firms in industrial countries find a larger market for their goods in other industrial countries than in developing countries because:

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Question 234 pts

A country benefits from trade if it is able to obtain a good from a foreign country:

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Question 244 pts

We know that industrial countries tend to trade with other industrial countries. This pattern counters the:

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Question 254 pts

It seems evident that countries would have an advantage in producing those goods that use relatively large amounts of their most abundant factor of production.

A stock's price follows a lognormal model. You are given:

(i) The current price of the stock is 105.

(ii) The probability that the stock's price will be less than 98 at the end of 6 months is 0.3483.

(iii) The probability that the stock's price will be less than 115 at the end of 9 months is 0.7123.

Calculate the expected price of the stock at the end of one year.

discuss price ceilings and price floors. They are responses by government to market failures. The text discusses rent control and minimum wage. Another application is limits often set by states, called usury laws, that limit the maximum interest rates that can be charged to borrowers. In some states, like Arkansas, this has resulted in the elimination of "pay day loans" and has shut down an industry.   Consider the results of this price ceiling. Are the economic effects worth the price?

When the government sets a ▼(maximum/ minimum) price that exceeds the equilibrium​ price, the result is permanent excess ▼ (supply/ demand). Producers will produce ▼ (less/more) and consumers buy ▼ (less/more).

For a perfectly competitive​ firm, marginal revenue equals price ▼(average cost/ marginal cost/ price), and to maximize​ profit, the firm produces the quantity of output at which ▼(marginal cost/ marginal revenue/ marginal cost) equals ▼ (price/ average cost)

What is the option delta? Delta = Spread of Option Price / Spread of Stock price Spread of Option Price = (40 * 1.2) – 40 = 8 Spread of Stock price = (40 * 1.2) – (40 * 0.833) = 14.7 Delta = 8 / 14.7 Delta = 0.544 What is (1,2) and (0.833) it this calculation?