monopolistically perfectly competitive firm? Explain in a few words. a) Large nu
ID: 1120121 • Letter: M
Question
monopolistically perfectly competitive firm? Explain in a few words. a) Large number of firms b) Slightly differentiated products competitivecteristics lead to the price charged by a firm to be higher than the price charged by a No barriers to entry d) The ability to price discriminate e) Large number of buyers . Total revenue of a firm is calculated by (2 marks) a) Multiplying quantity sold by the average total cost of production D) Dividing the total cost of production by number of units produced e) Multiplying the number of units sold by the price Write a formula or expression for total revenue using your choice above. Subtracting average total cost from the price at which the units were sold Multiplying number of units sold by the average variable cost of production at which they were sold Total Revenue Marginal Revenue Quantity of Output 0 200 500 3 $3000 The table above shows some figures for a perfectly competitive firm. Fill in the X's in the table above. Show your working to get full credit. (8 marks) 5. Which of the following is an accurate representation of relationships between short run costs? (2 marks) a)TC =TVC-TFC b) ATC = AVC-AFC c)AFC = ATC + AVC @ATC = AVC + AFC e)AVC = ATC + AFCExplanation / Answer
2. Option b
Slightly differentiated products allow the monopolistic firms exert some market power and hence charge more than competitive firms.
3. Option e
Simply put, TR = P*Q, where P is per unit price and Q is number of units sold.
4. For this part, we use the formula TR = P*Q. By hit and trial, we can verify that P = $3 per unit since at this price the firm can generate $3000 as revenue and after filling other blanks, it will also yield us $3 as MR (see work below).
In that case, the firm will need to produce 1000 units to produce $3000 as total revenue.
We may find fill in the “x” in the table -
5. Option d is correct (already marked)
Q TR MR 0 =0*3=0 200 =200*3=600 500 =500*3=1500 =(1500-600)/(500-200) = 3 1000 =1000*3=3000Related Questions
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