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i. Explain how a monopolist chooses the quantity of output to produce and price to
charge. Give graphical representation.
ii. Describe the ways policymakers can respond to the inefficiencies caused by the
monopolies.
Only one firm produces and sells soccer balls in a country namely XYZ, and as the story begins,
international trade in soccer balls is prohibited. The following equations describe the
monopolist’s demand, marginal revenue, total cost, and marginal cost:
Demand: P = 10 – Q.
Marginal Revenue: MR = 10 – 2 Q
Total Cost: TC = 3 + Q + 0.5
Marginal Cost: MC = 1 + Q
Where Q and P represent the quantity and prices respectively;
a. How many soccer balls does the monopolist produce? What will be the price and profit?
b. One day country decides free trade in the market that opens the doors for exporters and
importers. The world price for soccer balls is now $6. The market is now perfectly
competitive market. What will happen to the domestic production of the soccer balls?
i. Explain how a monopolist chooses the quantity of output to produce and price to
charge. Give graphical representation.
ii. Describe the ways policymakers can respond to the inefficiencies caused by the
monopolies.
A firm in competitive market receives $600 in total revenue and has $10 as marginal revenue.
What will be the average revenue and how many units were sold?
Why do competitive firms stay in Business if they make zero profit? Give reasons.
How a competitive firm does determine its profit maximization level of output? Explain. Also
discuss when it will decide to shut down and exit?
1) Consider a demand curve of the form Qd = 20-2p where Qd is the quantity demanded of a good and p is the price of the good. Also consider a supply curve of the form Qs = 2p-4 where Qs is the quantity supplied. Graph these curves. At what values of P and Q do these curves intersect?
2) Now suppose at each price individuals demand four more units of output, that is the demand curve shifts to Qdd = 24-2p. Graph this new curves. Graph this new curve on the diagram drawn in part 1) At what values of P and Q does the new demand curve intersect the supply curve identified in part 1)
Suppose that you are running a fast food chain business on a small stand near the Lake view park Islamabad. It’s a rainy day, and customers are lined up for burgers at your small stand. The following table shows your firm’s short-run production function for burgers. (10)
Number of workers Total Output
0 0
1 20
2 50
3 75
4 90
5 100
6 105
7 100
8 90
When does diminishing marginal product begin? How many workers are too many? Use marginal product to decide.
A baker thinks that there is a problem with the baked bread numbers in the bakery he is working. So, he started tracking the number of breads baked in the oven. About 7 days into the bakers monitoring, he had counted 120 baked breads, after 13 days he had counted 108. a. Write the equation that represents this situation (define your variable). b. Calculate the slope in the equation (show your solution). c. Draw a graph that will represent your slope intercepts. d. What is the correlation between the number of days and the baked breads in the bakery? e. Explain the cause and effect of the slope.
Q: 1 Suppose that you are running a fast food chain business on a small stand near the Lake view park Islamabad. It’s a rainy day, and customers are lined up for burgers at your small stand. The following table shows your firm’s short-run production function for burgers. (10)
Number of workers
Total Output
1
20
2
50
3
75
4
90
5
100
6
105
7
100
8
90
When does diminishing marginal product begin? How many workers are too many? Use marginal product to decide
#339914 on Dec 2023