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Consider a monopolistically competitive industry. A graph of demand and cost conditions for a typical firm is depicted in the diagram below.
a. Is this firm generating producer surplus? Is this firm earning a profit? How can you reconcile your answers?
b. Do you expect any entry into or exit from this industry to occur? Explain.
c. Suppose that the government reduces annual licensing fees, causing the fixed cost of the typical firm to fall. Make appropriate shifts of all curves that might be affected. What happens to producer surplus? What happens to profit? Do you expect the fall in fixed costs to cause entry into or exit from this industry? Explain.
d. Shift the demand and marginal revenue curves to reflect the entry/exit you indicated in (c). Find the new equilibrium.
e. Continue to reduce fixed cost. What happens to the demand curve as fixed cost continues to fall? What happens to producer surplus and profit?
f. Find the equilibrium as fixed cost falls to zero.
An investment opportunity has the potential of generating yearly revenues with the associated probabilities for the next five years as shown below. The salvage value at the end of five years is 0. The potential revenue in any given year is indepen..
What do these costs have to do with the viability of large and small groups?
If farmers were charged the same price as city residents pay, how would the price of agricultural produce, the quantity of produce grown, consumer surplus, and producer surplus change?
How much profit or loss per haircut does the firm have
how many paid the bulk of the bonuses to all of their employees.
The prices of five computer stocks increased by 37.2 percent, 1,140.0 percent, 2.7 percent, 842.0 percent and 0.95 percent, respectively since 1990.
Your profit from winning the auction is profit = (200 - bid) × probability of winning. Show that your profit maximizing strategy is bidding half of your valuation.
Explain how this requirement is likely to affect the growth of Human Capital in Senegal.
A torsion member is made by placing a circular tube inside a square tube, as shown, and joining their ends by rigid end-plates. The tubes are made of the same material and have the same constant wall thickness t = 5 mm.
Sue consumes only two goods, food and clothing. The marginal utility of the last dollar she spends on food is 12, and the marginal utility of the last dollar she spends on clothing is 9. The price of food is $1.20/unit, and the price of clothing is..
Using the following demand schedule, compute marginal and average revenue: Quantity 1 2 3 4 5 6 7 8 Price 100 95 88 80 70 55 40 22 Suppose the marginal cost of producing the good above is constant $10 per unit.
Suppose a competitive firm produces spaghetti dinners. The market price of a spaghetti dinner is $20. The cost of making the dinners is given by C(Q) = 10Q + (Q2/160). The marginal cost is given by MC = 10 + (Q/80).
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