The amount of profit or loss per unit and in total

Reference no: EM13189629

The best level of output for a monopolist in the short run is 500 units and is MR=MC. At this point Q=500, P= $11 and ATC= $8, so that the monopolist earns a profit of $3/per unit and a total profit of $1,500. Suppose that the AFC of the monopolist increase by $5 and that its AVC is $6 less than the new ATC at the best level of output.
a) What is the best level of output and price,

b) the amount of profit or loss per unit and in total and

c) whether it pays for the monopolist to produce?

Hint Given:
ATC=AFC + AVC. After AFC increases by $5 (ATC curve moves up vertically by $5 for every output Q) and MC, D and MR stay the same. The AFC for 500 units is $6, in other words the TFC is $3,000.

Reference no: EM13189629

Questions Cloud

Determine extreme points of linear combination : Suppose that two people, Michelle and James each live alone in an isolated region. They each have the same resources available, and they grow potatoes and raise chickens. If Michelle devotes all her resources to growing potatoes, she can raise 200..

What is the highest degree x-term : For the expression :4x^3 +2x^4 +6xy^2, what is the degree of this polynomial expression and what is the highest degree x-term?

Find the degrees of freedom for unequal variance test : A random sample of 20 items from the first population showed a mean of 100 and a standard deviation of 15. A sample of 16 items for the second population showed a mean of 94 and a standard deviation of 8.

Find the width of the window if the total area of square : A Norman window has the shape of a square with a semicircle mounted on it. Find the width of the window if the total area of the square and the semicircle is to be 200ft.

The amount of profit or loss per unit and in total : The best level of output for a monopolist in the short run is 500 units and is MR=MC. At this point Q=500, P= $11 and ATC= $8, so that the monopolist earns a profit of $3/per unit and a total profit of $1,500. Suppose that the AFC of the monopolis..

How far will an automobile travel in 6 hours : The distance in miles an automobile travels is given by the formula D = rt, where r is the rate in miles per hour and t is the time in hours. How far will an automobile travel in 6 hours at a rate of 55 miles per hour?

Prepare calculator application - mock objects for testing : Which other classes do you think will need to be stubbed with mock objects for testing the application? For each class you identify explain why you think that class needs mocking and at least three dierent mocked behaviours you will need.

What is the equilibrium price of lattes : Suppose that, on and near the U.C. Sunnydale campus, the weekly supply curve for lattes is given by the equation Q = max(1000 P - 2000, 0) : nobody makes any lattes unless the price is above $2/latte, and for each $1 the price is above $2 an extra..

Use the dual simplex method to solve the following lp : Use the dual simplex method to solve the following LP:

User Account

All Pages