Econ final

What is the marginal revenue from the sale of the fourth unit? $3 $9 $-3 $24

$-3

A monopolist can sell 200 units of output for $36.00 per unit. Alternatively, it can sell 201 units of output for $35.80 per unit. The marginal revenue of the 201st unit of output is $35.80. $-0.20. $4.20. $-4.20.

$-4.20

In short-run equilibrium, the perfectly competitive firm of Figure 8-8 will earn a total economic profit of $950 $1,425 $825 zero $575

(10 (P)- 8 (ATC)) * 475 (Q) when MC=MR

how calculate profit off a graph?

(P-ATC)*Q

If a monopolist faces a constant marginal cost of $5, how much output should the firm produce? 5 units 6 units 4 units 3 units

3 units, when MR=MC

If ATC>MC

Atc has to be falling

Nash equilibrium

Best strategy for a player once the other players have made their decision

Monopolistic, perfect competition, or both, earn 0 profit in the long run

Both

Monopolostic, perfect competition, or both have porfit/ losses in the shoirt run

Both

Product variety externality

Consumers gain surplus from lower prices due to more competition

What is average total cost

Determines how firms will price their product

Dominant strategy

Ideal strategy no matter what your opponent does. Firms do NOT always have a dominant strategy. ** Better off doing one thing over another no matter what

Potential shut down

If TR<VC or P<AVC. TR=FC when closed. Shut down when firm cant cover th3e cost of being open

Where does MC cross AC

Minimum point

Who produces the most product, from least to greatest

Monopoly, oligopoly, perfect competition

Who charges the most? The least?

Most- monoply Least- perfect comp

P=Mr and P=MC

Only in perfect competition, when price is constant

The firm in Exhibit 9-3, a monopolist that maximizes profit by charging all customers the same price, is making a profit of $234 $482 $468 $960

P=24 ATC=20 Q=117 (24-20)*117=$468

Perfect Competition is only efficient at

P=MR, MR=MC.

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its marginal revenue is less than the price of the product after the first unit sold. average revenue is less than the price of the product after the first unit sold. average revenue is less than marginal revenue after the first unit sold. marginal revenue is greater than the price of the product after the first unit sold.

marginal revenue is less than the price of the product after the first unit sold. P>MR

economic scales of production

cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs.

Efficient scale of production

When MC crosses ATC. the quantity of output that minimizes the average total cost

Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. What is the marginal cost of creating the tenth instructional module in a given month? $900 $1,250 $3,060 $2,500

$2500

Zach took $400,000 out of the bank and used it to start his new cookie business. The bank account pays 3 percent interest per year. During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $9,000. Refer to Scenario 13-2. Zach's economic profit for the year was $-6,000. $6,000. $3,000. $-506,000.

-6000

Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has leased computer equipment that costs $480 a month. What is the average variable cost $180.00 $533.33 $713.33 $700.00

533,33

At what quantity does John's Vineyard maximize profits? 8 6 7 3

6, 365-285=80 so P=MR

Zach took $400,000 out of the bank and used it to start his new cookie business. The bank account pays 3 percent interest per year. During the first year of his business, Zach sold 6,000 boxes of cookies for $2.50 per box. Also, during the first year, the cookie business incurred costs that required outlays of money amounting to $9,000. Refer to Scenario 13-2. Zach's accounting profit for the year was $6,000. $-6,000. $12,000. $-494,000.

6,000

A firm in a competitive market has the following cost structure: Output Total Cost 0 $5 1 $10 2 $12 3 $15 4 $24 5 $40 If the market price is $4, this firm will -produce four units in the short run and exit in the long run. -produce two units in the short run and exit in the long run. -produce three units in the short run and exit in the long run. -shut down in the short run and exit in the long run.

Produce three units in the short run and exit in the long run. Because 3*4=12 and 12-15=-3 which is the least amiount they can lose comapred to the other quantities

Short run, long run, or both have a fixed cost

Short run

Average total cost

TC/Q - Form "U-Shape" with ATC being x=AFC higher than AVC

how to calculate profit off a table

TR-TC

Characteristic's of monopolistic competition

The presence of many companies. Each company produces similar but differentiated products. Companies are not price takers. Free entry and exit in the industry. Companies compete based on product quality, price, and how the product is marketed.

accounting profit

Total revenue minus total explicit costs (purchased)

1. (6 points) This month, a factory produced 100 MP3 players. The total variable cost of production was $500 and the average total cost of production was $8. a) What is the total cost? b) What is the total fixed cost? c) What is the average fixed cost? d) What is the average variable cost? e) Is the MP3factory operating in the long run or short run? What is your answer based on?

a) Total cost can be calculated as average total cost times output, which is $8 × 100 = $800. b) Total fixed cost equals total cost minus total variable cost. The total cost from part (a) is $800. The total variable cost is $500. Therefore the total fixed cost is $800 - $500 = $300. c) Average fixed cost equals total fixed cost divided by output, which is $300/100 = $3. d) Average variable cost equals total variable cost divided by output. The total variable cost from part (b) is $500, so the average variable cost is $500/100 = $5. e) It is short run since there are fixed costs