Question 1

A monopolist has demand and cost curves given by: Q_D = 10,000 - 20P TC = 1,000 + 10Q + .05Q² a.Find the monopolist's profit-maximizing quantity and price. b.Find the monopolist's profit.

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Question 2

You've been hired by an unprofitable firm to determine whether it should shut down its operation.The firm currently uses 70 workers to produce 300 units of output per day.The daily wage (per worker)is $100,and the price of the firm's output is $30.The cost of other variable inputs is $500 per day.Although you don't know the firm's fixed cost,you know that it is high enough that the firm's total costs exceed its total revenue.You know that the marginal cost of the last unit is $30.Should the firm continue to operate at a loss? Carefully explain your answer.

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Question 3

Describe the process by which the competitive market establishes a price at which all firms are just earning normal profits.

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Question 4

A perfectly competitive firm has total revenue and total cost curves given by: TR = 100Q TC = 5,000 + 2Q + 0.2 Q² a.Find the profit-maximizing output for this firm. b.What profit does the firm make?

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Question 5

A perfectly competitive firm has the cost function TC = 1000 + 2Q + 0.1 Q².What is the lowest price at which this firm can break even?

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Question 6

How can break-even analysis be used to project the level of operation needed to achieve a targeted profit level?

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Question 7

True,false,or uncertain? Any firm that is not covering fixed costs should shut down in the short run.

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Question 8

Suppose that a perfectly competitive industry is in long-run equilibrium,and demand increases.Explain the short- and long-run effects on the firm and the industry.

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Question 9

What is the Degree of Operating Leverage?

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Question 10

Market price is $50.The firm's marginal cost curve is given by MC = 10 + 2Q.
a.Find the profit-maximizing output for the firm.
b.At this output,is the firm making a profit? Explain your answer.

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Question 11

Explain the difference between economic and normal profits.

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Question 12

Describe the difference in market structure between monopoly and oligopoly.

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Question 13

Why would a firm choose to remain in an industry in which it makes an economic profit of zero?

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Question 14

What are the limitations in using break-even analysis?

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Question 15

A monopolist has demand and cost curves given by: Q_D = 1000 - 2P TC = 5,000 + 50Q a.Find the monopolist's profit-maximizing quantity and price. b.Find the monopolist's profit.

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Question 16

A monopolist's demand function is P = 1624 - 4Q,and its total cost function is TC = 22,000 + 24Q -4Q² + 1/3 Q³,where Q is output produced and sold. a.At what level of output and sales (Q)and price (P)will total profits be maximized? b.At what level of output and sales (Q)and price (P)will total revenue be maximized? c.At what price (P)should the monopolist shut down?

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Question 17

What does it mean to say that a perfectly competitive firm is a price taker? Can't a firm set any price it chooses?

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Quiz 8: Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

A monopolist has demand and cost curves given by: QD = 10,000 - 20P TC = 1,000 + 10Q + .05Q2 a.Find the monopolist's profit-maximizing quantity and price. b.Find the monopolist's profit.