Barrier to the entry of new firm and the ways in which they block the new firms from the market. Concept Introduction: Economies of scale refer to the benefit achieved by the big entity over the small entity, because of producing in much effective and cost saving way. Larger the entity, lower is the cost.

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(Table: Barrels of Oil 2) Refer to the table. What is the marginal revenue of producing the fifth barrel of oil? Barrel of Oil Produced Total Revenue Total Cost Price 1 $50 $4 $50 10 234567896 100 10 50 150 21 50 200 38 50 250 61 50 300 90 50 350 126 50 400 176 50 450 266 50 500 390 50 61 50 200 250

Answer 1

Question

Chapter 9, Problem 1.2P

To determine

Barrier to the entry of new firm and the ways in which they block the new firms from the market.

Concept Introduction:

Economies of scale refer to the benefit achieved by the big entity over the small entity, because of producing in much effective and cost saving way. Larger the entity, lower is the cost.

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(Table: Barrels of Oil 2) Refer to the table. What is the marginal revenue of producing the fifth barrel of oil? Barrel of Oil Produced Total Revenue Total Cost Price 1 $50 $4 $50 10 234567896 100 10 50 150 21 50 200 38 50 250 61 50 300 90 50 350 126 50 400 176 50 450 266 50 500 390 50 61 50 200 250

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q 0 1 2 3 4 5 6 TFC $5 5 5 5 5 5 5 TVC $0 3 Marginal revenue is 5 9 16 25 36 MC $3 2 4 7 9 11 P= MR $5 5 5 5 5 5 5 TR $0 5 10 15 20 25 30 TC $5 8 10 14 21 30 41 Profit $-5 - 3 0 1 - 1 -5 - 11 A profit-maximizing firm should produce a quantity of 3 units. (Enter your response as a whole number.) marginal cost for the first units of output. If the company decides to produce more than units, the marginal cost would exceed marginal revenue and profit would