Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 3SPPA
To determine
To calculate:
The quantity, price and economic profit made by Company L and Company K in short run.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The figure below shows the situation facing Smart Digit, Inc, a firm in monopolistic competition
that produces calculators. What is the firm's economic profit per day?
20
16
MC
ATC
12
MR
100
200
300 400 500
600
Quantity (calculators per day)
00
4.
Price and costs (dollars per calculator)
Consider the diagram below depicting the revenue and cost conditions faced by a monopolistically competitive firm, and then answer
the following questions.
$40
$35
$30
MC
ATC
$25
$20
$17 A
$15
$10
4.40
$5
3.25
MR
Demand
3
4
5
7
8 9 10
Quantity
Instructions: Round your answers to 2 decimal places.
a. What is total revenue for this firm?
$56.88
b. What is total cost for this firm?
$ $58.88
c. What is this firm's economic profit?
d. This firm is most likely In long-run
]equilibrlum because
Instructions: In order to recelve full credit, you must make a selection for each option. For correct answer(s), click the box once to
place a check mark. For Incorrect answer(s). click the option twice to empty the box.
? P= ATC.
? P> MC.
? MR = MC.
2 the firm is experlencing normal profits.
2 the firm is experlencing economic profits.
7 demand exceeds marginal revenue.
Price and costs
Figure 16-5
Markup
Q"
Qc
MC
ATC
a. profit-maximizing output
b. efficient scale output
C. inefficient output
d.
excess capacity
D
Consider that Figure 16-5 represents a monopolistically competitive firm. What does the distance
between Q** and Qc represent?
Chapter 17 Solutions
Foundations of Economics (8th Edition)
Ch. 17 - Prob. 1SPPACh. 17 - Prob. 2SPPACh. 17 - Prob. 3SPPACh. 17 - Prob. 4SPPACh. 17 - Prob. 5SPPACh. 17 - Prob. 6SPPACh. 17 - Prob. 7SPPACh. 17 - Prob. 8SPPACh. 17 - Prob. 9SPPACh. 17 - Prob. 10SPPA
Ch. 17 - Washtenaw Dairy in Ann Arbor, Michigan, sells 63...Ch. 17 - Prob. 2IAPACh. 17 - Prob. 3IAPACh. 17 - Prob. 4IAPACh. 17 - Prob. 5IAPACh. 17 - Use the following information to work Problems 5...Ch. 17 - Prob. 7IAPACh. 17 - Prob. 8IAPACh. 17 - Prob. 9IAPACh. 17 - Prob. 1MCQCh. 17 - Prob. 2MCQCh. 17 - Prob. 3MCQCh. 17 - Prob. 4MCQCh. 17 - Prob. 5MCQCh. 17 - Prob. 6MCQCh. 17 - Prob. 7MCQ
Knowledge Booster
Similar questions
- QUESTION 7 The graph below summarizes the demand and costs for a firm that operates under a monopolistically competitive market. Instruction: Use the nearest whole numbers on the graph when calculating numerical responses below. $ 220 MC 200 - 180 - 160 - ATC 140 - 120- 100 - 80 - 60 40 - 20- MR 2 4 8 10 12 14 16 18 20 22 24 26 Quantity a. What level of output should this firm produce in the short run? units. b. What price should this firm charge in the short run?P = $ c. What is the firm's total cost at this level of output? TC = d. What is the firm's profit if it produces this level of output? Profits = $ g. What adjustments should the manager be anticipating? (А, В, С, or D). A. Demand will remain unchanged over time. B. Demand will decrease over time as new firms enter the market. C. Demand will increase over time as firms exit the market. D. Demand will increase over time a new firms enter the market.arrow_forwardWhat is the main difference between a perfectly competitive industry and a monopolistically competitive industry? Select one: a. zero economic profit expected in the long run b. the number of firms in the market c. no barriers to entry d. product differentiationarrow_forwardConsider the diagram below depicting the revenue and cost conditions faced by a monopolistically competitive firm, and then answer the following questions. $40 $35 $30 MC ATC $25 $20 $17.50 $15 $10 $4.40 $5 3.25 MR Demand 1 2 3 4 5 6 7 8 9 10 Quantity Instructions: Round your answers to 2 decimal places. a. What is total revenue for this firm? b. What is total cost for this firm? c. What is this firm's economic profit? d. This firm is most likely in (Click to select) V equilibrium because Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. ? MR = MC. ? the firm is experiencing economic profits. 2 the firm is experiencing normal profits. ? P> MC. ? demand exceeds marginal revenue. ? P= ATC. Price and costsarrow_forward
- a. The diagram below shows the short-run equilibrium of a firm. Price (RM) 20 17 12 50 70 ii. Calculate the firm's total revenue. iii. Calculate the firm's total cost. MC iv. Calculate the firm's profit or loss. i. Is this firm operating in the perfect competition, monopolistic competition, or monopoly market structure? v. Name the type of profit earned by the firm. ATC AR-MR i. Number of firms in the market ii. Type of products sold in the market iii. Ability of the firm to control product price Quantity b. Briefly explain the differences between perfect competition and monopoly in term of the following properties:arrow_forwardThe cost of producing a tube of tooth paste is $0.05. If the market for tooth paste is monopolistically competitive, a manufacturer who charges $0.05 for each bottle will ________. a. exit the industry in the long run b. earn zero economic profits in the short run c. incur a loss in the short run d. shut down production in the short runarrow_forward1. The graph shows the demand curve and marginal revenue curve of Lite and Kool, Inc., a producer of running shoes in monopolistic competition. Draw the firm's marginal cost curve if Lite and Kool produces 125 pairs of shoes a week. Label it. Draw a point at the profit-maximizing quantity and price. If the average total cost at the profit-maximizing quantity is $50 a pair, Lite and Kool's economic profit is $_____ 2.A single−price monopoly has marginal revenue and marginal cost equal to $19 at 15 units of output where the price on the demand curve is $38. What is the firm's total revenue? A.$19 B.$570 C.$38 D.$285 E. There is not enough information given to answer the question.arrow_forward
- Figure 16-2 This figure depicts a situation in a monopolistically competitive market. 100 90 80 70 60 50 40 30 20 10 MC MR ATC Demand 10 20 30 40 50 60 70 80 90 100 QUANTITY Refer to Figure 16-2. Assuming the firm is maximizing profit, this firm is operating a. in the short run and earning a positive economic profit. b. in the long run and incurring and economic loss. c. in the short run and breaking even. d. in the long run and earning a positive economic profit..arrow_forwardQUESTION 11 Price and costs (dollars per calculator) 20 000 16 12 8 0 100 MC ATC O MR 200 300 400 500 600 Quantity (calculators per day) The figure above shows the situation facing Smart Digit, Inc., a firm in monopolistic competition that produces calculators. What quantity does the firm produce? more than 300 calculators per day and less than 400 calculators per day 300 calculators per day 400 calculators per day 200 calculators per dayarrow_forwardThe graph shows the demand curve and marginal revenue curve of Java Time, Inc., a producer of espresso machines in monopolistic competition. Draw the firm's marginal cost curve if Java Time produces 125 espresso machines a week. Label it Draw a point at the profit-maximizing quantity and price. if average total cost at the profit-maximizing quantity is $100 a machine, what is Java Time's economic profit? Java Time's economic pro t is $ Selected: none ON 804 604 0 Price and cost (dollars per machine) 25 50 75 100 125 150 1175 200 225 250 2 Quantity (espresso machines per week) >>> Draw only the objects specified in the question ate Clear ?arrow_forward
- In monopolistic competition, a firm has some ability to affect the price for its product because of Select one a. economic profits. b.easy entry and exit. C. many competitors product differentlation.arrow_forwardWeek #8 Assignment: 2. Sub-subje Monopolistic Competitor What is the profit - maximizing output level? What is the firm's proft - maximizing price? Is this firm productively efficient? Will the firm eam a profit or loss at the profit - maximizing output level? How much is that profit or looss? Based on this information, do you think fims will enter or exit this industry? Why or whynot?arrow_forward3 of 7 3. Use the graph below to answer the following questions: a. Profit maximizing output level_ b. Price charged by the monopolistic competitor_ c. Total Revenue_ d. Total Cost_ e. Variable Cost f. Fixed Cost_ g. Profit or Loss h. Number of units the firm should produce in the short run and explain why? i. Number of units the firm should produce in the long run and explain why? j. In the long run, (exit/entry)_ will cause the firm's share of the market to (increase/decrease). and the firm will (decrease/increase) advertising k. In the long run the firm's costs will (decrease/increase) will (increase/decrease) of the market 5453 4.5 4 3.5 2 40 45 50 MC MR until loss is driven to ATC and the firm's share AVC d = firm's market sharearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
