Which of the following is true about all markets (monopoly, oligopoly, competitive market)? Select one: O a. In all markets, firm make positive economic profits. O b. In all markets, the profit maximizing rule is MR=MC O c. In all markets, price is fixed. O d. In all markets, demand is downward sloping. Clear my choice
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- Paolo's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Paolo produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Paolo faces. As you can see, to sell the additional engine, Paolo must lower his price from $75,000 to $50,000 per fire engine. Note that while Paolo gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $50,000 rather than $75,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. PRICE (Thousands of dollars per fire engine) 250 225 200 175 150 125 100 75 50 25 thinin 0 3 4 5 6 7 QUANTITY (Fire engines) a Demand Revenue…250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 7 8 9. 10 QUANTITY (Fire engines) Gilberto increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Gilberto's Fire Engines were a competitive firm instead and $100,000 were the market price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantity and, thus, total revenue. O True O False acer Σ 2. 1. PRICE (Thousands of dollars per fire engine)Air Canada and WestJet recently cut their prices for flights between Toronto and Edmonton to $199. In response, Porter Airlines cut its price from $239 to $199 for flights between Toronto and Edmonton in order to remain competitive. Based on this example, what degree of competition exists in the airline industry? Select one: O a. monopolistic competition O b. oligopoly O C. perfect competition O d. not enough information to answer O e. Monopoly B
- Scenario 3: You are studying a market for which the kinked-demand curve model applies. The kinked demand curve is as follows: Q = 1200-5P for 0 ≤ Q< 150 Q = 360-P for Q ≥ 150 The marginal cost is given as: MC = Q Refer to Scenario 3. What is the profit-maximizing level of output? A. 171.43 B. 120 C. 150 D. All of the above O E. None of the aboveMR =MC =D is the condition under Select one: Oa. Oligopoly O b. Monopolistic competition O c. Pure monopoly O d. Pure competitionThe table below shows the weekly marginal cost (MC) and average total cost (ATC) for Smitten, a perfectly competitive firm that produces children's mittens in a competitive market. Smitten's Production Costs Marginal Cost (dollars) $1.60 Quantity (pairs of Average Total Cost |(dollars) $2.2 mittens) 25 30 2.00 2.17 35 2.45 2.21 40 3.55 2.38 45 4.00 2.56 50 5.50 2.85 55 6.00 3.14 60 8.50 3.58 Instructions: In part a, enter your answer as a whole number. In parts b, c and d, round your answers to 2 decimal places. a. If the market price of children's mittens is $6.00 per pair, how many pairs of children's mittens should Smitten produce per week to maximize its profits? 6 pairs of mittens b. When the market price is $6.00, what is Smitten's average total cost at the profit-maximizing quantity of children's mittens? c. What are Smitten's weekly profits if the market price is $6.00 per pair and the firm produces the profit-maximizing quantity of mittens? %24 %24
- Suppose MPH Book Store is the only bookstore in the Kota Warisan area near XMU. Figure 3 shows the demand curve for economics books and MPH's Book Store marginal revenue (MR) curve and marginal cost (MC) curve. MPH's Book Store will maximize its profit and set the price of the economic book equal to and has a total annual revenue of 100 80 60 MC 40 20 D MR 20 40 60 80 100 120 Quantity (units per day) Figure 3 O a. $40, $1,600 O b. No correct answer O c. $60; $1,200 O d. $40; $800 Price and costs (dollars per unit)What is the market situation exist when there are many buyers and many sellers? O Monopoly Recession O None of the choices Oligopoly O Perfect competition *Raphael's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Raphael produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Raphael faces. As you can see, to sell the additional engine, Raphael must lower his price from $80,000 to $40,000 per fire engine. Note that while Raphael gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. 200 180 160 Revenue Lost 140 120 Revenue Gained 100 80 Demand 60 40 20 2 3 4. 6. 7 8 9 10 QUANTITY (Fire engines) PRICE (Thousands of…
- QUESTION 5 Which of the following is true for monopoly and perfect competition? CA The demand for the individual firm's product is perfectly elastic. O B.Economic profits can OC.Marginal revenue is be sustained O D. Profits are maximized by producing at the level of output where marginal revenue is equal to marginal cost horizontal at the indefinitely over time. industry equilibrium price.Price and cost (dollars per ride) The graph shows the market for the two zipline firms that operate in a resort city. If the firms decide to compete, then together they will produce rides at a price of per ride. 60 O A. 400: $30 MC O B. 400; $50 50 O C. between 200 and 400: between $30 and $50 40 O D. 200: $30 O E. 200; $50 30 20 'D 10 MR 100 200 300 400 500 Quantity (number of rides)Suppose that a firm produces wool jackets in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. (?) PRICE (Dollars perjacket) 100 90 80 70 60 50 40 30 20 10 0 0 MC 10 ATC MR 20 30 40 50 80 70 QUANTITY (Thousands of jackets) 80 Demand 90 100 O F ++ Mon Comp Outcome Min Unit Cost hp e