Question 1

The figure above shows the demand and cost curves facing a price-setting firm.At what output is marginal revenue $20?

Accepted Answer

The answer of  The figure above shows the demand...

Question 2

Which of the following is true of a monopolist in the long run?

Accepted Answer

A monopolist in the long run will charge a price higher than long-run marginal cost (A) and equal to or greater than long-run average cost (B), making both A and B correct.

Question 3

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the fixed)wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

Accepted Answer

The answer of A monopolist is currently hiring 5,000 units...

Question 4

Refer to the following table which gives the demand and cost data for a price-setting firm:  What is the profit-maximizing price?

Accepted Answer

To find the profit-maximizing price, we need to find the price at which the difference between the revenue and cost is the highest. We can calculate the revenue for each price by multiplying the demand by the price, and then subtract the corresponding cost to get the profit. 
For example, 
At a price of $20, the demand is 10, so the revenue is 10*$20=$200, and the cost is $220, so the profit is -$20. 
Similarly, we can calculate the profit for each price and then choose the price at which the profit is highest. 
Price of $15 yields a profit of -$180, 
Price of $16 yields a profit of -$120, 
Price of $17 yields a profit of -$60, 
Price of $18 yields a profit of $0, 
Price of $19 yields a profit of $60.

Thus, the profit is maximized at a price of $18.

Question 5

A monopolist will maximize profit by producing the level of output at which

Accepted Answer

The answer of A monopolist will maximize profit by producing...

Question 6

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing or loss-minimizing)level of output is

Accepted Answer

The answer of  The figure above shows the demand...

Question 7

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output:  How much does the fifth unit of labor add to the firm's total revenue?

Accepted Answer

To determine the marginal revenue product of the fifth unit of labor, we need to take the derivative of the total revenue with respect to labor and multiply it by the marginal product of labor. 
The total revenue generated by the first four units of labor can be found by adding up the demand values corresponding to each level of output. This gives us: 
$200 + $240 + $280 + $320 = $1,040 
The marginal product of the fifth unit of labor can be found by taking the difference between the total product of four units and five units: 
20 - 16 = 4 
To find the marginal revenue product of the fifth unit of labor, we need to find the change in total revenue resulting from adding the fifth unit of labor. The demand for the fifth unit of output is $360, which means that the total revenue with five units of labor is: 
$1,040 + $360 = $1,400 
Thus, the marginal revenue product of the fifth unit of labor is: 
($1,400 - $1,040) * 4 = $1,440 
However, the question asks about the change in total revenue, which is simply the revenue generated by the fifth unit of labor: 
$1,400 - $1,040 = $360 
Since the marginal product of labor is 4, this means that the fifth unit of labor adds $360/4 = $90 to the firm's total revenue. However, we need to keep in mind that this is the revenue generated by the fifth unit of labor, not the marginal revenue product, which is $1,440. Therefore, none of the answer choices are correct except for C, which comes closest to the correct answer of $90.

Question 8

Refer to the following table which gives the demand and cost data for a price-setting firm:  What is the maximum amount of profit that this firm can earn?

Accepted Answer

The answer of Refer to the following table which gives...

Question 9

The figure above shows the demand and cost curves facing a price-setting firm.What is marginal revenue when output is 100 units?

Accepted Answer

The answer of  The figure above shows the demand...

Question 10

A monopolist is producing a level of output at which price is $65,marginal revenue is $35,average total cost is $35,and marginal cost is $50.In order to maximize profit,the firm should

Accepted Answer

The firm is currently producing where marginal cost exceeds marginal revenue, meaning it is not maximizing profit. To maximize profit, the firm should decrease output until marginal revenue equals marginal cost. Since marginal cost is currently $50 and marginal revenue is only $35, the firm should decrease output. Choice E (both c and d) is incorrect because the firm should not increase production or decrease price to maximize profit.

Question 11

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output:  If an increase in consumers' income increases product price by $2 at each level of output,how many units of labor will the firm employ at a wage rate of $300?

Accepted Answer

To determine the optimal level of labor for a given wage rate and output level, we need to find the point where the marginal cost of labor equals the marginal revenue product of labor.

At a wage rate of $300, the marginal cost of labor equals $300. To find the marginal revenue product of labor, we need to calculate the derivative of total revenue with respect to labor, which is equal to the marginal revenue from column 2 multiplied by the quantity sold at each level of output from column 3, or:

MRPL = (10-0.1L)*1100

Setting MRPL equal to MC, we get:

(10-0.1L)*1100 = 300
=> L = 50/11

However, this is not a feasible solution since the firm can only employ integer units of labor. We therefore round down to the nearest integer, which gives:

L = 4

Therefore, the firm will employ 4 units of labor at a wage rate of $300.

Question 12

A firm with market power is producing a level of output at which price is $8,marginal revenue is $5,average variable cost is $6,and marginal cost is $10.In order to maximize profit,the firm should

Accepted Answer

The firm is currently producing at a level where marginal cost is greater than marginal revenue ($5<$10). This means the firm is not maximizing profit. In order to increase profit, the firm should reduce output until marginal revenue equals marginal cost. However, since the price ($8) is already greater than average variable cost ($6), the firm is covering its variable costs and some fixed costs. Hence, reducing output to where MR=MC would not cover all the fixed costs and will cause a greater loss. Therefore, the firm should increase price in order to increase the marginal revenue and maximize profit.

Question 13

A firm facing a downward sloping demand curve is producing a level of output at which price is $7,marginal revenue is $5,and average total cost,which is at its minimum value,is $3.In order to maximize profit,the firm should

Accepted Answer

The answer of A firm facing a downward sloping demand...

Question 14

A firm with market power will maximize profit by hiring the amount of an input at which the

Accepted Answer

A firm with market power will maximize profit by hiring the amount of an input at which the marginal revenue product (MRP) of the last unit of the input hired equals its marginal cost (MC). This is equivalent to saying that the last unit of the input hired adds the same amount to total revenue (through its contribution to output and thus sales) as it adds to total cost.

Question 15

A profit-maximizing firm with market power will always produce a level of output where

Accepted Answer

The answer of A profit-maximizing firm with market power will...

Question 16

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing)equilibrium,the price-setting firm earns $______ in total revenue,which is ___________ the maximum possible total revenue of $________.

Accepted Answer

The answer of  The figure above shows the demand...

Question 17

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output:  If the monopolist faces a fixed wage rate of $300,how many units of labor will the firm employ?

Accepted Answer

The answer of Columns 1 and 2 make up a...

Question 18

The above graph shows the demand and cost conditions facing a price-setting firm. What is the maximum amount of profit the firm can earn?

Accepted Answer

The maximum amount of profit a firm can earn is where marginal revenue equals marginal cost. This occurs at point F1 for this graph. At that point, the price is $200 and the quantity is 3. Therefore, the total revenue is $600, and the total cost is $520 (comprised of fixed costs of $200 and variable costs of $320). Thus, the maximum profit is $80 (total revenue - total cost).

Question 19

Suppose that a profit-maximizing monopolist has a plant of optimal size and is producing a level of output at which price is $30,average total cost is $55,and average fixed cost is $40.The firm should

Accepted Answer

In the short run, a firm should continue to operate if it can cover its variable costs, even if it's not covering its total costs. Here, the average total cost is $55, and the average fixed cost is $40, so the average variable cost is $15 ($55 - $40). Since the price ($30) is above the average variable cost, the firm should operate in the short run (A). In the long run, if the firm cannot cover its total costs, it should exit the market (C). Thus, both A and C are correct.

Question 20

A monopolist which suffers losses in the short run will

Accepted Answer

The answer of A monopolist which suffers losses in the...

Quiz 12: Managerial Decisions for Firms With Market Power

The figure above shows the demand and cost curves facing a price-setting firm.At what output is marginal revenue $20?

Which of the following is true of a monopolist in the long run?

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the fixed) wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

Refer to the following table which gives the demand and cost data for a price-setting firm: What is the profit-maximizing price?

A monopolist will maximize profit by producing the level of output at which

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing or loss-minimizing) level of output is

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: How much does the fifth unit of labor add to the firm's total revenue?

Refer to the following table which gives the demand and cost data for a price-setting firm: What is the maximum amount of profit that this firm can earn?

The figure above shows the demand and cost curves facing a price-setting firm.What is marginal revenue when output is 100 units?

A monopolist is producing a level of output at which price is $65,marginal revenue is $35,average total cost is $35,and marginal cost is $50.In order to maximize profit,the firm should

A firm with market power is producing a level of output at which price is $8,marginal revenue is $5,average variable cost is $6,and marginal cost is $10.In order to maximize profit,the firm should

A firm facing a downward sloping demand curve is producing a level of output at which price is $7,marginal revenue is $5,and average total cost,which is at its minimum value,is $3.In order to maximize profit,the firm should

A firm with market power will maximize profit by hiring the amount of an input at which the

A profit-maximizing firm with market power will always produce a level of output where

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing) equilibrium,the price-setting firm earns $ in total revenue,which is _ the maximum possible total revenue of $____.

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: If the monopolist faces a fixed wage rate of $300,how many units of labor will the firm employ?

The above graph shows the demand and cost conditions facing a price-setting firm. What is the maximum amount of profit the firm can earn?

Suppose that a profit-maximizing monopolist has a plant of optimal size and is producing a level of output at which price is $30,average total cost is $55,and average fixed cost is $40.The firm should

A monopolist which suffers losses in the short run will

Quiz 12: Managerial Decisions for Firms With Market Power

The figure above shows the demand and cost curves facing a price-setting firm.At what output is marginal revenue $20?

Which of the following is true of a monopolist in the long run?

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the fixed) wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

Refer to the following table which gives the demand and cost data for a price-setting firm: What is the profit-maximizing price?

A monopolist will maximize profit by producing the level of output at which

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing or loss-minimizing) level of output is

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: How much does the fifth unit of labor add to the firm's total revenue?

Refer to the following table which gives the demand and cost data for a price-setting firm: What is the maximum amount of profit that this firm can earn?

The figure above shows the demand and cost curves facing a price-setting firm.What is marginal revenue when output is 100 units?

A monopolist is producing a level of output at which price is $65,marginal revenue is $35,average total cost is $35,and marginal cost is $50.In order to maximize profit,the firm should

A firm with market power is producing a level of output at which price is $8,marginal revenue is $5,average variable cost is $6,and marginal cost is $10.In order to maximize profit,the firm should

A firm facing a downward sloping demand curve is producing a level of output at which price is $7,marginal revenue is $5,and average total cost,which is at its minimum value,is $3.In order to maximize profit,the firm should

A firm with market power will maximize profit by hiring the amount of an input at which the

A profit-maximizing firm with market power will always produce a level of output where

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing) equilibrium,the price-setting firm earns $______ in total revenue,which is ___________ the maximum possible total revenue of $________.

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: If the monopolist faces a fixed wage rate of $300,how many units of labor will the firm employ?

The above graph shows the demand and cost conditions facing a price-setting firm. What is the maximum amount of profit the firm can earn?

Suppose that a profit-maximizing monopolist has a plant of optimal size and is producing a level of output at which price is $30,average total cost is $55,and average fixed cost is $40.The firm should

A monopolist which suffers losses in the short run will

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing) equilibrium,the price-setting firm earns $ in total revenue,which is _ the maximum possible total revenue of $____.