1. If, at the output where marginal cost equal marginal revenue, both a pure com
ID: 1162176 • Letter: 1
Question
1. If, at the output where marginal cost equal marginal revenue, both a pure competitor's and a monopolistic's marginal revenue is $5.00.
A. Both sellers' profit-maximizing price will be $5.00
B. Both sellers' profit-maximizing price will be greater than $5.00
C. The pure competitor's profit-maximizing price will be $5.00 and the monopolist's profit-maximizing price will be greater than $5.00
D. The monopolist's profit-maximizing price will be $5.00 and the pure competitor's profit-maximizing price will be greater than $5.00
2. Which of the following gives a correct conclusion to the sentence below?
In pure competition over the long run, entry of new firms into the market occurs if
A. Economic profits are earned and results in a lower market price
B. Economic profits are earned and results in a higher market price
C. Losses are incurred and results in a lower market price
D. Losses are incurred and results in a higher market price
E. None of the above
3. To minimize profit or minimize loss, the firm in this figure should:
A. Sell 475 units of output and charge a price of $22
B. Sell 600 units of output and charge a price of $10
C. Sell 300 units of output and change a price of $60
D. Sell 300 units of output and charge a price of $40
E. Sell 300 units of output and charge a price of $10
state.instructure.com/courses/66007/quizzes/119921/take Question4 To maximize profit or minimize loss, the firm in this figure should: Price, Marginal Revenue, and Marginal Cost $80 70 60 50 MC 40 30 20 10 MA Hundieds of Units Seif 475 anits af output and chuige a priceof s22 o2Explanation / Answer
1. If at the output where MC=MR, both a pure competitor's and a monopolistic's marginal revenue is $5.00 . Then , pure competitor's profit maximising price will be $5.00 (where P=MR=MC) and the monopolist's profit maximising price will be greater than $5.00 (where MR=MC and at that quantity level ,it touches the demand curve at greater than $5.00 price level). Hence, option(C) is correct.
2. In pure competition over the long run, entry of new firms into the market occurs if economic profits are earned and results in a lower market price . Hence, option(A) is correct.
3. To maximise profit the firm should sell 300 units of output where MR=MC and touches the demand curve at $$40. Hence, option (D) is correct i.e the firm should sell 300 units of output and change a price of $40.
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