L 15- Scale and Productivity Definitions Characteristic of a fixed resource; characteristic of a variable resource • Marginal Revenue Scale of Operation - what it refers to • Scale of operation - things a business would look at to decide upon scale of operation • Total Product • Average Product (know the formula; do not have to calculate) • Marginal Product (know the formula; do not have to calculate) Law of Diminishing Returns Concepts What is the value of marginal revenue in the elastic range of the demand curve; in the inelastic range Business should operate in the elastic region of its client's demand curve Recognize an example of a fixed or a variable resource What is the difference between the short run and the long run in economics Where does the feasible range of production begin, on productivity curves; where does it end Business should operate within the feasible range of production
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g. factory space) - Variable resource: a resource that can be easily adjusted based on the level of production (e.g. labor) - Marginal Revenue: the additional revenue generated from producing one more unit of a good or service - Scale of Operation: refers to the Show more…
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The demand, marginal revenue, marginal cost, and average total cost curves shown below are for a brand name toothpaste produced and sold by a monopolistically competitive supplier. 1. How many firms are characteristic of a monopolistically competitive market? A) Only One. B) Just a few firms. C) Many firms. D) The number of firms does not matter. 2. The profit-maximizing quantity of output A) occurs where the marginal revenue from the product equals the marginal cost. B) must be when the average variable cost of the product equals the marginal cost. C) occurs where the price chosen for the product equals the marginal cost. D) is the amount necessary to minimize its average total cost. 3. Is product differentiation in monopolistic competition more like a perfectly competitive market or monopoly? Why? 4. Based on the curves provided in the graph: A) What is the profit-maximizing quantity of output? Q^ B) What is the profit-maximizing price for the product? P^ 5. Based on the information provided, the best formula to calculate the optimum profit is A) Profit = TR (total revenue) - TC (total cost) B) Profit = (P^ - ATC) * Q^ C) Profit = (P^ - MC) * Q^ D) Profit = Sales - Explicit Costs 6. Based on the curves provided, what is the profit earned at the profit-maximizing price and quantity? A) $0 (zero) B) $18,000 C) $40,000 D) $60,000 E) $120,000 7. Draw a demand curve on the graph consistent with long-run entry and equilibrium in this tooth paste market. (hint: Should economic profit in the long-run be zero?) 8. A price-making firm A) faces a fixed market price and chooses its level of output. B) faces a fixed amount of output and chooses its price. C) can choose any combination of output and price lying of its supply curve. D) can choose any combination of output and price lying on the demand curve for its product. 9. If a profit-maximizing firm's marginal revenue exceeds its marginal cost, then it should A) Raise its price. B) Not change output or price. C) Leave the industry. D) Lower its price. 10. TRUE or FALSE: Advertising and Brand Names are common in both perfectly competitive markets and monopolistically competitive markets. Briefly explain.
Akash M.
The degree to which the quantity of a good is provided or demanded in response to changes in its price, income, or the availability of alternatives is known as its elasticity of supply and demand. It is computed by dividing the percentage change in quantity provided or required by the percentage change in price, income, or substitute availability. A product is said to be elastic when the percentage change in quantity supplied or sought is higher than the percentage change in price, revenue, or the availability of alternatives. On the other hand, a product is deemed inelastic if the percentage change in quantity provided or required is less than the percentage change in price, revenue, or the availability of alternatives. -Supply elastic: Goods like apparel, toys, and electronics that are easily and quickly produced are examples of supply elastic. Suppliers may swiftly boost production to satisfy demand when the price of these products rises, which leads to a significant increase in the quantity supplied. things that are not necessities, like soft drinks, for which there are other options and substitutes. Fidget spinners, which just need simple raw materials and are comparatively simple to create. Taxi services are comparatively simple to offer and may be scaled to meet demand. - Supply inelastic: Goods like private planes, luxury automobiles, and yachts that are costly or difficult to make are examples of products with an elastic supply. There is only a slight increase in the quantity supplied when suppliers find it difficult to meet demand when the price of these products rises. One example of a good with an inelastic supply is a nuclear reactor, which requires a lot of experience and time to produce. Respond to this discussion post
Crystal W.
Suppose that each firm in a competitive industry has the following costs: Total Cost: TC = 50 + 12q Marginal Cost: MC = q where q is an individual firm's quantity produced. The market demand curve for this product is Demand: Qd = 120 - P where P is the price and Q is the total quantity of the good in the market. Currently, there are 9 firms in the market. a) What is each firm's fixed cost? What is its variable cost? Give the equation for average total cost. b) At Q = 10, the average total cost curve is at its minimum. What is marginal cost and average total cost at that quantity? c) With a fixed number of firms, give the equation for each firm's long-run supply curve. (Hint: Use your results from part b). d) Give the equation for the market supply curve for the short run in which the number of firms is fixed. e) What is the equilibrium price and quantity for this market in the short run? f) In this equilibrium, how much does each firm produce? Calculate each firm's profit or loss. Do firms have an incentive to enter or exit? g) In the long run with free entry and exit, what is the equilibrium price and quantity in this market? h) In this long-run equilibrium, how much does each firm produce? How many firms are in the market?
Breanna O.
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