3. Use the demand also schedule listed below to calculate full revenue and marginal revenue at each quantity. Plot the demand, total‐revenue, and marginal-revenue curves, and also describe the relationships between them. Exsimple why the marginal revenue of the fourth unit of output is $3.50, even though its price is $5. Use Chapter 6"s total‐revenue test for price elasticity to designate the elastic and also inelastic segments of your graphed demand also curve. What generalization can you make as to the connection between marginal revenue and elasticity of demand? Suppose the marginal cost of successive systems of output was zero. What output would the profit‐seeking firm produce? Finally, usage your evaluation to describe why a monopolist would certainly never produce in the inelastic region of demand.

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develop table.Since TR is enhancing at a diminishing rate, MR is declining. When TR transforms downward (starts decreasing), MR becomes negative.
1. Suppose a pure monopolist is challenged through the demand also schedule shown below and the same cost data as the competitive producer discussed in trouble 4 at the finish of Chapter 10. Calculate the lacking total‐revenue and also marginal‐revenue quantities, and also identify the profit‐maximizing price and also profit‐maximizing output for this monopolist. What is the monopolist"s profit? Verify your answer graphically and also by comparing complete revenue and also total expense.
develop table.Profit-maximizing price = $63; profit-maximizing amount = 4 units; monopolist"s profit = $42.
2. Suppose that a price‐discriminating monopolist has segregated its industry into 2 teams of buyers. The first team defined by the demand and revenue information that you developed for problem 1. The demand also and also revenue information for the second group of buyers is presented in the accompanying table. Assume that MC is $13 in both industries and also MC = ATC at all output levels. What price will the firm charge in each market? Based exclusively on these two prices, which industry has actually the greater price elasticity of demand? What will certainly be this monopolist"s full financial profit?
Price in industry 1 = $48; price in industry 2 = $33; the second market has actually the better price elasticity of demand; full economic profit = $330.
3. Assume that the most effective manufacturing modern technology available for making vitamin pills has actually the price framework provided in the following table. Keep in mind that output is measured as the variety of bottles of vitamins produced per day and that costs incorporate a normal profit.a. What is ATC per unit for each level of output listed in the table?b. Is this a decreasing‐cost industry? (Answer yes or no).c. Suppose that the market price for a bottle of vitamins is $2.50 and also that at that price the complete industry quantity demanded is 75,000,000 bottles. How many firms will certainly tright here be in this industry?d. Suppose that instead the industry amount demanded at a price of $2.50 is only 75,000. How many kind of firms perform you intend there to be in this industry?e. Review your answers to components b, c, and also d. Does the level of demand also recognize this industry"s sector structure?
(a) ATC per bottle is $4 per bottle at 25,000 bottles, $3 per bottle at 50,000 bottles, $2.50 per bottle at 75,000 units, and $2.76 per bottle at 100,000 systems. (b) No. (c) There will certainly be 1000 firms in this sector. (d) Tright here will be one firm in this industry. (e) Yes.
4. A new manufacturing innovation for making vitamins is invented by a college professor who decides not to patent it. Thus, it is accessible for anybody to copy and also put into usage. The TC per bottle for production as much as 100,000 bottles per day is provided in the complying with table.a. What is ATC for each level of output noted in the table?b. Suppose that for each 25,000‐bottle per day boost in manufacturing above100,000 bottles per day, TC increases by $5,000 (so that, for circumstances, 125,000 bottles per day would certainly generate complete costs of $85,000 and 150,000 bottles per day would geneprice full expenses of $90,000). Is this a decreasing‐cost industry? c. Suppose that the price of a bottle of vitamins is $1.33 and also that at that price the complete quantity demanded by consumers is 75,000,000 bottles. How many firms will certainly tbelow be in this industry?d. Suppose that instead the industry amount demanded at a price of $1.33 is just 75,000. How many type of firms carry out you expect tright here to be in this industry?e. Review your answers to components b, c, and d. Does the level of demand identify this industry"s sector structure?f. Compare your answer to part d of this question via your answer to component d of trouble 3. Do both production modern technologies present continuous returns to scale?
a. ATC per bottle is $2.00 per bottle for 25,000 bottles, $1.40 per bottle for 50,000 bottles, $1 per bottle for 75,000 bottles, and also $0.80 per bottle for 100,000 bottles. b. Yes, this is a decreasing cost market. c. Only one firm because this is a herbal monopoly instance. d. Only one firm since this is a herbal monopoly case. e. No, the level of demand also does not identify this market"s structure. f. No, the new technology of this trouble shows economic situations of range and this industry is therefore a decreasing-expense industry.

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5. Suppose you have been tasked with regulating a solitary monopoly firm that sells 50‐pound bags of concrete. The firm has actually fixed expenses of $10 million per year and a variable expense of $1 per bag no matter just how many bags are produced. a. If this firm preserved on increasing its output level, would certainly ATC per bag ever before increase? Is this a decreasing‐expense industry?b. If you wimelted to control this monopoly by charging the socially optimal price, what price would certainly you charge? At that price, what would be the dimension of the firm"s profit or loss? Would the firm desire to exit the industry?c. You uncover out that if you set the price at $2 per bag, consumers will certainly demand 10 million bags. How huge will certainly the firm"s profit or loss be at that price?d. If consumers rather demanded 20 million bags at a price of $2 per bag, exactly how significant would certainly the firm"s profit or loss be?e. Suppose that demand is perfectly inelastic at 20 million bags, so that consumers demand also 20 million bags no issue what the price is. What price should you charge if you desire the firm to earn just fair price of return? Assume as always that TC contains a normal profit.
a. ATC will never boost. This is a decreasing expense industry. b. Charge $1 per bag. At that price, the firm would certainly shed its $10 million fixed costs. This firm would be shedding money and also will want to departure the sector. c. The firm will certainly break even (no profit or loss). d. The firm will certainly make an financial profit of $10 million. e. You should charge $1.50 per bag if you desire this firm to earn a fair price of return.
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Online Learning Center to acagency Essentials of Investments8th EditionAlan J. Marcus, Alex Kane, Zvi Bodie
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