A Report Submitted in Partial Fulfillment of the Requirements for Microeconomics
Autor: Sara17 • November 18, 2017 • 1,386 Words (6 Pages) • 725 Views
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Diagrams of monopolistic profit maximization:Short Run
[pic 2]
Supernormal Profit
Firms can make profit when AC is below than AR.TR>TC and it is economic profit.
[pic 3]
Normal Profit
Firms only earns normal profit when AC is equal to AR.TR=TC it is breakeven point.
[pic 4]
Firms makes losses when AC is above than AR.TR
Diagrams of monopolistic profit maximization:Long Run
[pic 5]
Diagrams of oligopolistic profit maximization:Short Run
[pic 6][pic 7]
Question 2:
Quantity of DVDs
Total variable cost $
Average fixed cost
Average variable cost
Average total cost
Marginal cost
0
0
0
0
0
0
1000
5000
50
5
55
5
2000
8000
25
4
29
3
3000
9000
16.67
3
19.67
1
4000
14000
12.5
3.5
16
5
5000
20000
10
4
14
6
6000
33000
8.33
5.5
13.83
13
7000
49000
7.14
7
14.14
16
8000
72000
6.25
9
15.25
23
9000
99000
5.56
11
16.56
27
10000
150000
5
15
20
51
b) Break-even: smallest in ATC (13.8)
Shut-down: smallest in AVC (3)
c)TR=2 AVC=5
The Revenue should be higher or equal than variable cost.
Loss and she should shut down because selling price less than shut-down price .
d) TR=7 AVC=5
Loss but she should continue to produce because selling price bigger than shut-down price.
e)TR=14 AVC=5
Profit and she should continue to produce because selling price bigger than shut-down price and also bigger that break-even price.
Question 3:
a)
[pic 8]
Demand will increase
• Demand curve shift to the right .
• Equilibrium price increase (P to P1)
• Equilibrium quantity increase (Q to Q1)
b)
[pic 9]
supply will decrease :
• Supply curve shift to the left.
• Equilibrium price increase (P to P1)
• Equilibrium quantity decrease (Q to Q1)
c)
[pic 10]
Supply will increase :
• Supply curve shift to the right
• Equilibrium price decrease (P1 to P2)
• Equilibrium quantity increase (Q1 to Q2)
2.
[pic 11]
- Floor price _ minimum
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