Microsoft is the only business that sells Computer Operation System in the world. Assuming that Microsoft is maximizing its profit, which of the following statements is true? Select one: a. Microsoft prices will be less than marginal cost b. Microsoft prices will be higher than marginal cost c. Microsoft prices will equal marginal cost. d. Microsoft prices will be a function of supply and demand and will therefore oscillate around marginal costs.
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- i6 of 16 Freddie is considering opening a diner in a small town. Price Analysts explain to him that the profitability of his diner depends partly on the degree of product differentiation that exists in the market. The graph represent the diner's average ATC total cost curve, ATC, and two hypothetical demand curves, D1 and D2. If the actual demand is D2, what would be the diner's excess capacity? excess capacity: meals D2 D1 Which hypothetical demand curve represents a market 227 312 397 with a higher degree of product differentiation? Quantity (meals per day) D1 D2 not enough information to determineThe following graph shows Crest's demand curve, marginal-revenue (MR) curve, average-total-cost (ATC) curve, and marginal-cost (MC) curve. Use the black point (plus symbol) to indicate Crest's profit-maximizing output and price. (?) Price, Cost, Revenue Demand ATC O True MR Quantity of Crest Toothpaste True or False: Crest's profit is positive. + Profit MaxSuppose High-Tech Software sells two products-a word-processing package and a spreadsheet package. Suppose that the business community values the word-processing package at $100 per unit and the spreadsheet package at $250 per unit while the university community values the word-processing package at $125 and the spreadsheet at $200. (Assume that the marginal cost of each unit is zero.) a. What are the profit-maximizing price that High-Tech should charge if they sell each product separately and what is the total price of the two goods? b. If High-Tech is able to engage in tying, what is the profit-maximizing price for the two products as a bundle? c. Should this be legal?
- Dave's Donuts sold 1,000 donuts. Total revenue was $400, and the cost of producing the 1,000 donuts was $300. What is the profit for Dave's Donuts? $1,000 $500 $100 $400There are several pen manufacturers in Corinthia. However, the pens sold by each manufacturer have a unique design. How will the demand for pens faced by the existing pen manufacturers in Corinthia be affected if new firms enter the industry in the long run? a. The demand curve faced by the existing firms will become perfectly elastic. b. The demand faced by the existing firms will decrease. c. The demand curve faced by the existing firms will become perfectly inelastic. d. The demand faced by the existing firms will increase.Henry Potter owns the only well in town that produces clean drinking water. He faces the following demand, marginal revenue, and marginal cost curves:Demand: P = 70 – QMarginal revenue: MR = 70 – 2QMarginal cost: MC = 10 + Qa) Graph these three curves. Assuming that Mr. Potter maximizes profit, what quantity does he produce? What price does he charge? Show these results on your graph.b) Mayor George Bailey, concerned about water consumers, is considering a price ceiling that is 10 percent below the monopoly price derived in part (a). What quantity would be demanded at this new price? Would the profit-maximizing Mr. Potter produce that amount? Explain. (Hint: Think about marginal cost.)c) George’s Uncle Billy says that a price ceiling is a bad idea because price ceilings cause shortages. Is he right in thiscase? What size shortage would the price ceiling create? Explain.d) George’s friend Clarence, who is even more concerned about consumers, suggests a price ceiling 50 percent below…
- Please answer all 1. Coldwater Bicycle Company operates its factories at capacity and holds a dominant market position in its home country. When it receives a premium priced order from a new customer in another country, it must decide whether to fill that order or continue to supply the full demand in its home market. When it decided not to completely fill the new order, it incurred Group of answer choices a. Sunk costs b. Average costs c. Opportunity costs d. Marginal costs 2. What might happen if a car dealership is awarded a bonus by the manufacturer for selling a certain number of its cars monthly, but the dealership is just short of that quota near the end of the month? Group of answer choices a. Potential buyers will lose buying power at the dealer b. It may sell the remaining cars at huge discounts to hit the quota c. It creates an incentive to sell cars from different manufacturers d. It would ruin the relationship between dealer and manufacturer…Mindy's salon is a small business that acts as a price taker (MR=P). The prevailing market price for each haircut is $20. Mindy's cost are given by Total cost = 0.1q^2 + 10q + 50 where q = the number of customers a day. a. How many customers should Mindy choose to maximize profit? b. Calculate Mindy's maximum daily profit. c. Graph these results, and label Mindy's supply curve.The graph shown below is that of Do Drop In, a shop in the dry-cleaning industry. a) At the optimal output, what price will Do Drop In charge and what will be its output? Price: $ Output: units b) At the optimal price and output, what will be its total revenue, total cost, and total loss? TR: $ ; TC: $ Total loss: $ c) If this firm made a rational decision to continue to produce, despite the loss, average variable cost must be below what level? AVC must be less than $ .
- Question 18 Alex Potter owns the only well in a town that produces clean drinking water. He faces the following demand P=200-2Q, and marginal cost MC=50+2Q, marginal revenue MR= 200-4Q curves. In order to maximize profits, Alex should charge a price of $150 at the profit maximizing quantity with a marginal revenue equal to $150. $100 at the profit maximizing quantity with a marginal revenue equal to $150. $100 at the profit maximizing quantity with a marginal revenue equal to $100. $150 at the profit maximizing quantity with a marginal revenue equal to $100. O OSuppose you own fast food takeaway shops, one in Glebe, with lots of competition, and one in Tibooburra, with little competition. In Glebe, the price elasticity of demand is -2.5, while in Tibooburra, it is -2.0. Assume the marginal cost of providing a combo burger is $10. What are the optimal prices of a combo burger in each location?Using the graph on the next page, do the following problems: Determine the profit maximizing level of output when the market price for the good is $75/unit. Show this on the graph by making the appropriate drawing (with a straight-edge). Also, write the number (an appropriate estimate should be made) below the graph. • On the graph, show the maximum total profit that can be generated by the firm based on the market price. Do NOT calculate the value - show the appropriate box on the graph. Be careful in your (straight) lines. Be clear as to the part of the graph that represents the profit. Use shading as appropriate. • Below the graph, write the interpretation of the values of the marginal cost (MC) and the average total cost (ATC) at the profit-maximizing level of output; make sure to use all the appropriate names and units. Write the values and interpretations below the graph. • Answer the following questions: If the market price of the good falls, the profit maximizing level of…