Question: Micro unit 4 problem set Block: Micro Unit 4 Problem Set 1. Explain why demand equals marginal revenue for perfectly competitive firms but marginal revenue

Micro unit 4 problem set

Block: Micro Unit 4 Problem Set 1. Explain why demand equals marginal revenue for perfectly competitive firms but marginal revenue is less than the demand curve for non price-discriminating monopolists. (/3) for Perfectly competitive firms, demand: MR Since they are price taker. Monopolists has a down ward slop demand curve and Ma is less thandemand because lowering the price For an extra unit will reduce Renerve on allor the previous units 2. Suppose a pure monopolist is faced with the demand schedule shown below. Answer the following questions. Price QD TR MR $11 0 $10 1 10 $9 2 18 $8 3 MR = ML $7 4 $6 5 30 MC - S $5 6 20 MR closer $4 7 78 $3 8 24 $2 9 $1 10 10 a. Calculate the total revenue and marginal revenue for the table above ( 12) b. Assume that the marginal cost and average total cost for this monopoly is $5. What is the profit maximizing price and quantity. How did you get your answer ( /2) Price : 8 Q : 3 c. Calculate the total cost and total profit (or loss) at the profit maximizing quantity ( 2) TC ? AXL X a 76 - 5 x 3 7 15 profit = TR- TC TR - 6 x 3 : 24 C : 15 TP: 9 d. Use the total revenue test to identify the elastic and inelastic ranges of the demand curve. ( 2) Elastic Range, Poke all topb Inelastic Range : Prices tool

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