CAS EC 101 Lecture Notes - Lecture 16: Average Cost, Marginal Revenue, Market Power

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13 Dec 2017

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Ea(cid:272)h (cid:271)u(cid:468)e(cid:409) and selle(cid:409) is a p(cid:409)i(cid:272)e take(cid:409) Fi(cid:409)ms (cid:272)an (cid:310)(cid:409)eel(cid:468) ente(cid:409) o(cid:409) e(cid:467)it the ma(cid:409)ket. A(cid:461)e(cid:409)a(cid:311)e (cid:409)e(cid:461)enue = total (cid:409)e(cid:461)enue / (cid:408)uantit(cid:468) Ma(cid:409)(cid:311)inal (cid:409)e(cid:461)enue = total (cid:409)e(cid:461)enue / (cid:408)uantit(cid:468) P(cid:409)odu(cid:272)e (cid:408)uantit(cid:468) (cid:462)he(cid:409)e total (cid:409)e(cid:461)enue minus total (cid:272)ost is (cid:311)(cid:409)eatest. The ma(cid:409)(cid:311)inal-(cid:272)ost (cid:272)u(cid:409)(cid:461)e and the (cid:310)i(cid:409)m"s suppl(cid:468) de(cid:272)ision. A(cid:461)e(cid:409)a(cid:311)e total (cid:272)ost (cid:272)u(cid:409)(cid:461)e is u shaped. Mc (cid:272)u(cid:409)(cid:461)e (cid:272)(cid:409)osses the atc (cid:272)u(cid:409)(cid:461)e at the minimum o(cid:310) the atc (cid:272)u(cid:409)(cid:461)e. I(cid:310) mr > mc, (cid:310)i(cid:409)m should increase output. I(cid:310) mc > mr, (cid:310)i(cid:409)m should decrease output. I(cid:310) mr = mc, p(cid:409)o(cid:310)it-ma(cid:467)imizin(cid:311) le(cid:461)el o(cid:310) output. Dete(cid:409)mines the (cid:408)uantit(cid:468) o(cid:310) the (cid:311)ood the (cid:310)i(cid:409)m is (cid:462)illin(cid:311) to suppl(cid:468) at an(cid:468) p(cid:409)i(cid:272)e. A (cid:272)ost that has al(cid:409)ead(cid:468) (cid:271)een (cid:272)ommitted and (cid:272)annot (cid:271)e (cid:409)e(cid:272)o(cid:461)e(cid:409)ed. In the sho(cid:409)t (cid:409)un, (cid:310)i(cid:467)ed (cid:272)osts a(cid:409)e sunk (cid:272)osts. Fi(cid:409)m still has to pa(cid:468) (cid:310)i(cid:467)ed (cid:272)osts. Fi(cid:409)m doesn"t ha(cid:461)e to pa(cid:468) an(cid:468) (cid:272)osts. Same as p(cid:409)i(cid:272)e < a(cid:461)e(cid:409)a(cid:311)e total (cid:272)osts. Same as p(cid:409)i(cid:272)e > a(cid:461)e(cid:409)a(cid:311)e total (cid:272)osts.

Related Questions

a. Private firms seek to maximize (per unit profits , total profits , total revenue, or total costs)

b. The amount by which Total Cost rises when one more unit is produced is called the (total profit, total loss, marginal cost, or total revenue)

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the (total cost marginal revenue, marginal cost, or marginal profit), and this is equal to the (total cost , quantity of output total price or total profit).

(each are fill in the blank and need one of the terms listed).

ultramarinewoodchuck739

a. Private firms seek to maximize (per unit profits , total profits , total revenue, or total costs)

b. The amount by which Total Cost rises when one more unit is produced is called the (total profit, total loss, marginal cost, or total revenue)

c. For firms in perfectly competitive markets, the amount by which the Total Revenue rises when one more unit is sold is called the (total cost marginal revenue, marginal cost, or marginal profit) , and this is equal to the (total cost , quantity of output, total price or total profit) .

(each are fill in the blank and need one of the terms listed).

greymouse802

32. Which of the following is not a difference between monopolies and perfectly competitive markets?

A. Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

B. Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.

C. Monopolies can earn profits in the long run while perfectly competitive firms break even.

D. Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.

40. Which of the following statements is not correct?

A. Both monopolies and monopolistically competitive firms can earn economic profits in the long run.

B. Both monopolistically competitive and perfectly competitive firms can earn economic profits in the short run.

C. Only competitive firms produce the welfare-maximizing level of output.

D. Firms in perfect competition, monopolistic competition, and monopoly maximize profits by producing where marginal revenue equals marginal cost.

43. A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that

A. the profits of the firm are negative.

B. firms are likely to leave this market in the long run.

C. the firm is currently maximizing its profit.

D. All of the above are correct.

CAS EC 101 Lecture Notes - Lecture 16: Average Cost, Marginal Revenue, Market Power

CAS EC 101 Full Course Notes

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