a. Graph a purely competitive market showing the point of equilibrium at a price of $150 and a total product of 400,000. b. Next to this graph, graph the purely competitive firm. What price will the firm charge for the product? Will they charge $150, less than $150, or more than $150? c. Show the demand, average revenue, and marginal revenue curve on the graph for the firm. d. Show the profit maximizing quantity for the firm at 250 units of output, or tp. e. Show this firm making a profit of $5,000, making sure to solve for the numerical value for the ATC at the quantity, or tp, of 250, and showing the profit area on the graph.
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- Sally runs a vegetable stand. The following table shows two points on the demand curve for the heirloom tomatoes she sells: Price $3.50 $2.25 Quantity demanded per week 150,000 250,000 Sally's marginal revenue from lowering the price of tomatoes from $3.50 to $2.25 is $ 0.375. (Enter your response rounded to two decimal places.) Lowering the price from $3.50 to $2.25 results in an output effect of $ and a price effect of $. (Enter your responses as whole numbers and include a minus sign if necessary.)Show in graph a consumers’ surplus when the market is perfectly competitive and when its monoplized.Refer to the demand schedule below. a. Use the following demand schedule to calculate total revenue and marginal revenue at each quantity. Instructions: Enter your answers rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Quantity Demanded (Q) Price (P) Total Revenue Marginal Revenue $7.00 0.00 6.50 24 6.50 %24 6.50 6.00 12.00 $ 5.50 5.50 %24 16.50 24 4.50 5.00 4. 24 20.00 %24 3.50 4.50 24 22.50 $ 2.50 4.00 %24 24.00 $ 1.50 3.50 %24 24.50 24 0.50 3.00 8. 24.00 24 -0.50 2.50 22.50 24 -1.50 26 Tools 24 TR 22 20 TR D. 18 16 14 12 MR 10 8. 4 D. MR -2 0 1 2 3 4 5 6 7 8 9 10 Quantity Instructions: Enter your answers rounded to two decimal places. For each segment, be sure to enter the highest price first. c. Use Chapter 6's total-revenue test for price elasticity to designate the elastic and inelastic segments of your graphed demand curve. Demand is elastic from a price of $ Demand is inelastic from a…
- Use the graph below of a perfectly competitive firm to answer these questions and assume that the industry price is $P4 Price P₂ aaaa P₁ MC AVC ATC Q₁Q₂ Q3 Q4 Quantity 1. At an industry price of P4, what is the profit mazimizing level of output and what type of profit/loss is the firm earning 2. If there is a decrease in industry demand causig the industry price to fall to P2, what is the profit maximizing level output, pr position of the firm or is this firm producing in the short run? 3. What industry price represents the long run profit position for the firm?Mario's Pizza is the only pizza place in Sorrento City. The graph shows the market demand curve for pizza in Sorrento City. Mario's Pizza is a perfect price discriminator. What is the marginal revenue from the 20th pizza sold in an hour? The marginal revenue from the 20th pizza sold in an hour is O A. $300 O B. - $4 O C. $16 O D. $15 40- 35- 30- 25- 20- 15- 10- 5- 0+ -0 Price (dollars per pizza) -10 5 10 15 20 25 30 Quantity (pizzas per hour) D 35 40 -SUsing graph, explain when the firm in a competitive market is in equilibrium?
- What is a price taker? A price taker is A. a firm with a perfectly inelastic demand curve. B. a firm that has the ability to charge a price greater than marginal cost. C. a firm that is unable to affect the market price. D. a firm that does not seek to maximize profits. E. a firm with a downward-sloping demand curve. When are firms likely to be price takers? A firm is likely to be a price taker when A. it has market power. B. firms in the industry collude. C. it sells a differentiated product. D. it represents a small fraction of the total market. E. barriers to entry are substantial.3. Johnny Rockabilly has just finished recording his latest CD. His record company's marketing department determines that the demand for the CD is as follows: Price Number of CDs $24 10 000 22 20 000 20 20 30 000 18 40 000 16 50 000 14 60 000 The company can produce the CD with no fixed cost and a variable cost of $5 per CD. a. Find total revenue for quantity equal to 10 000, 20 000, and so on. What is the marginal revenue for each 10 000 increase in the quantity sold? b. What quantity of CDs would maximize profit? What would be the price? What would be the profit? c. If you were Johnny's agent, what recording fee would you advise Johnny to demand from the record company? Why?Instructions: Enter your answers rounded to two decimal places. For each segment, be sure to enter the highest price first. c. Use Chapter 6's total-revenue test for price elasticity to designate the elastic and inelastic segments of your graphed demand curve. Demand is elastic from a price of $ Demand is inelastic from a price of $ to a price of $ to a price of $ d. In general, when marginal revenue is positive, demand is elastic When marginal revenue is negative, demand is inelastic e. Suppose the marginal cost of successive units of output is zero. What output would the profit-seeking firm produce? (Assume the firm can only produce whole units.)
- 2. The gains and loss from selling one more unit Sean's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Sean produced seven fire engines, but he has decided to increase production to eight fire engines. The following graph shows the demand curve Sean faces. As you can see, to sell the additional engine, Sean must lower his price from $100,000 to $50,000 per fire engine. Note that although Sean gains revenue from the additional engine he sells, he also loses revenue from the initial seven 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 seven engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000.16. The accompanying graph shows the short-run demand and cost situation for a price searcher in a market with low barri- ers to entry. a. What level of output will maximize the firm's profit level? b. What price will the firm charge? c. How much revenue will the firm receive in this situation? How much is total cost? Total profit? d. How will the situation change over time?Instructions: Enter your answers rounded to two decimal places. For each segment, be sure to enter the highest price first. c. Use Chapter 6's total-revenue test for price elasticity to designate the elastic and inelastic segments of your graphed demand curve. Demand is elastic from a price of $ Demand is inelastic from a price of $ to a price of $ to a price of $ d. In general, when marginal revenue is positive, demand is elastic When marginal revenue is negative, demand is inelastic e. Suppose the marginal cost of successive units of output is zero. What output would the profit-seeking firm produce? (Assume the firm can only produce whole units.)