Question : 51) A monopolistically competitive firm should lower its price if : 1244637

 

 

51) A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost.

 

52) If a perfectly competitive firm maximizes short-run profits, its marginal revenue will be positive and less than its price.

 

53) A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output.

 

54) Unlike a perfectly competitive firm, a monopolistic competitor does not have a short-run shut-down point.

55) Arturo runs a Taco Bell franchise. He is selling 250 Gordita Supremes per week at a price of $2.75. If he lowers the price to $2.70, he will sell 251 Gordita Supremes. What is the marginal revenue of the 251st Gordita Supreme? If selling the extra Gordita Supreme adds $0.20 to Arturo’s costs, what will be the effect on his profit from selling 251 Gordita Supremes instead of 250?

 

56) Central Grocery in New Orleans is famous for its muffaletta, a large round sandwich filled with deli meats and topped with a tangy olive salad. Suppose the following table represents cost and revenue data for Central Grocery.

 

Muffalettas Sold per Day

Price (P)

Total Revenue (TR)

Marginal Revenue (MR)

Total Cost (TC)

Marginal Cost (MC)

Average Total Cost (ATC)

Profit

          0

   $15

       $0

      —

    $12

      —

      —

-$12

          1

     14

       14

    $14

      18

      $6

   $18.00

     -4

          2

     13

       26

      12

      20

        2

     10.00

       6

          3

     12

       36

      10

      21

        1

       7.00

     15

          4

     11

       44

        8

      23

        2

       5.75

     21

          5

     10

       50

        6

      26

        3

       5.20

     24

          6

       9

       54

        4

      30

        4

       5.00

     24

          7

       8

       56

        2

      35

        5

       5.00

     21

          8

       7

       56

        0

      42

        7

       5.25

     14

          9

       6

       54

      -2

      52

     10

       5.70

       2

        10

       5

       50

      -4

      78

     16

       7.80

   -28

 

Illustrate this data by graphing the demand, MR, MC, and ATC curves. Identify the profit-maximizing price and quantity, and show the area representing the total profit received by Central Grocery.

 

 

Figure 11-10

Figure 11-10 shows cost and demand curves for a monopolistically competitive producer of iced-tea.

 

57) Refer to Figure 11-10. to answer the following questions.

a. What is the profit-maximizing output level?

b. What is the profit-maximizing price?

c. At the profit-maximizing output level, how much profit will be realized?

d. Does this graph most likely represent the long run or the short run? Why?

 

Figure 11-6

 

 

58) Refer to Figure 11-6. Suppose the above graph represents the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced by Dell. On a graph, illustrate the demand, MR, MC, and ATC curves which would represent Dell maximizing profits at a quantity of 100,000 per month and identify the area on the graph which represents the profit.

 

59) Central Grocery in New Orleans is famous for its muffaletta, a large round sandwich filled with deli meats and topped with a tangy olive salad. Suppose the following table represents cost and revenue data for Central Grocery. Fill in the columns for TR, MR, MC, ATC, and profit. If Central Grocery wants to maximize profits, what price should it charge for a muffaletta, what quantity should it sell, and what will be the amount of its total profit?

 

Muffalettas Sold per Day

Price (P)

Total Revenue (TR)

Marginal Revenue (MR)

Total Cost (TC)

Marginal Cost (MC)

Average Total Cost (ATC)

Profit

          0

   $15

 

 

    $12

 

 

 

          1

     14

 

 

      18

 

 

 

          2

     13

 

 

      20

 

 

 

          3

     12

 

 

      21

 

 

 

          4

     11

 

 

      23

 

 

 

          5

     10

 

 

      26

 

 

 

          6

       9

 

 

      30

 

 

 

          7

       8

 

 

      35

 

 

 

          8

       7

 

 

      42

 

 

 

          9

       6

 

 

      52

 

 

 

        10

       5

 

 

      78

 

 

 

 

 

 

 

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