Many marginal cost curves are U-shaped. As a result, it is possible that the MC curve hits the demand or price line at two output levels. Which is the profit- maximizing output? Why?
Answer to relevant QuestionsInitially, the market price was p = 20 and the competitive firm’s minimum average variable cost was 18, while its minimum average cost was 21. Should it shut down? Why? Now this firm’s average variable cost increases by ...If a specific subsidy (negative tax) of s is given to only one competitive firm, how should that firm change its output level to maximize its profit, and how does its maximum profit change? Use a graph to illustrate your ...The “Upward-Sloping Long-Run Supply Curve for Cotton” Mini-Case shows a supply curve for cotton. Discuss the equilibrium if the world demand curve crosses this supply curve in either (a) a flat section labeled Brazil or ...The government sets a minimum wage above the current equilibrium wage. What effect does the minimum wage have on the market equilibrium? What are its effects on consumer surplus, producer surplus, and total surplus? Who are ...Using a graph, show under what condition the monopoly operates—does not shut down—in the long run. Discuss your result in terms of the demand curve and the average cost curve at the profit-maximizing quantity.
Post your question