In a competitive market, no single producer can influence the market price becau
ID: 1114546 • Letter: I
Question
In a competitive market, no single producer can influence the market price because many other sellers are offering a product that is essentially identical consumers have more influence over the market price than producers do. government intervention prevents firms from influencing price producers agree not to change the price. b. d. Table 4. Suppose that a firm in a competitive market faces the following revenucs and costs: uantity Total Revenue Total Cost 12 18 12 17 30 36 30 38 27. Refer to Table 4. The firm should not produce an output level beyond a. 4 units b. 5 units c. 6 units. d. 7 units 28. Refer to Table 4. The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost is greater than marginal revenue. equals marginal revenue. is less than marginal revenue. is minimized. a. b. c. d. 29. Refer to Table 4. In order to maximize profits, the firm will produce a. 1 unit of output because marginal cost is minimized. b. 4 units of output because marginal revenue exceeds marginal cost. c. 5 units of output because marginal revenue equals marginal cost. d. 7 units of output because total revenue is maximized.Explanation / Answer
(26) (a)
Since there are many firms selling identical goods, no single firm has any market power or influence.
(27) (b)
Marginal revenue (MR) = Change in Total revenue (TR) / Change in quantity (Q)
Marginal cost (MC) = Change in Total cost (TC) / Change in quantity (Q)
A monopolist will equate MR with MC. When MR = MC = $6, Q = 5 units beyond which monopolist will not produce.
(28) (c)
(29) (c)
Q TR ($) TC ($) MR ($) MC ($) 0 0 3 1 6 5 6 2 2 12 8 6 3 3 18 12 6 4 4 24 17 6 5 5 30 23 6 6 6 36 30 6 7 7 42 38 6 8