Question
Assume that fixed cost are S100. Using ihc data in Table 3, above, the total cost of producing 6 units of output is: In Table 3, above, the firm would shut down in the short-run if the market price of its output In Table 3, above, the break-even price for the firm would be: In Tabic 3, above, if the market price were $71. the firm would produce: If a single-price monopoly has shut down, then at the level of output where marginal cost and marginal revenue intersect, it MUST be true that: Refer to Figure 4. above. For the single-price monopoly depicted, when profit is maximized, quantity is: Refer to Figure 4, above. If the single-price monopoly depicted is maximizing profit, what is the total profit?:
Explanation / Answer
27) c ---$430 TC= TVC + TFC TVC at 6th unit = 330, TFC is $100 TC= 330+100 = 430 28) d below $35. The out put price should atleast cover the AVC( avg varaible cost); if the price is below the AVC than the firm has to shut down.In the above table the lowest AVC is $35. 29) a---$70 when break even is achieved when total revenue equals total cost or when Avg Total Cost equal to Price. in the above options only $70 matches the ATC at output level 4 and 5. 30) b --- 5 units of output. The rationale of nay firm is to maximize profit, for profit maximization Price shold eqaul to the margical cost, at 5th unit price is $71 and MC is $70 so the firm maximizes it profit at 5th unit. At 6th unit Price is $71 and MC is $80 and it incurs $10 loss. 31) c price is less than AVC Shut down point exixts when MR=MC= AVC or when P is less than AVC. 32) e---none of the above. A monopoly does not have a supply curve as it cannot take supply decision independent of demand. 33) b-- quantity 3 units and price is $6 Intersection of MR=MC and from that point a line is drawn to demand curve. 34) c ---$6 Intersection of MR=MC and from that point a line is drawn to demand curve. Intersection of MR=MC and from that point a line is drawn to demand curve. Price is $6 and ATC is $4 Total revenue= $6 x3 units = $18 Total cost = ATC x output = $4 x 3 units = $12 Profit = 18-12 = $6