Utility‚ Util‚ Total and Marginal Utilities‚ and thereon the Law of Diminishing Marginal Utility. Then‚ closely study exhibit 1 for numerical and graphical examples of these new terms. Read about the Diamond-Water Paradox‚ check the solution to the paradox‚ and conclude that: Prices reflect Marginal Utility‚ not Total Utility. Consumer Equilibrium occurs when two conditions are met: (1) consumer has spent all of budgeted income on goods and services‚ and (2) the marginal utilities per price on each
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is the difference between average‚ total‚ and marginal revenue? What is the shape of the total and marginal revenue curves for the individual competitive firm? 6. Why does price equal marginal revenue for the purely competitive firm? What is the relationship to the demand curve for the firm? 7. Below is a demand schedule facing an individual firm. Complete the table by computing average revenue‚ total revenue‚ and marginal revenue. Then answer the following two questions:
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Chapter: 5 Question: Categorize each seller below on the basis of the type of market it operates in. Explain each of your answers: a. A Cattle farmer b. A Computer market c. A picture framing shop is a large metropolitan area. d. A seller of Canadian dollars in a foreign currency markets. e. A life insurance company f. A liquor store in a remote village g. A visual Artist h. A Country that produces a valuable radioactive mineral found in no other part of the world. Answer to the question
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Average Product” as “Average output per employee.” MP has to do with the extra output produced by the last person that was hired. Q (L‚K) = a + bL + cL2 +dL3 only labor is in the SR production formula. Q (L‚K) = a + bKL + cK2L2 +dK3L3 (Both labor and capital are in LR formula.) TFC =Total Capital Costs = rK Here “r” represents the “capital costs over the specified time period for 1-unit of capital K.” TC = wL + rK‚ w = wage rate paid to each laborer (per time period)‚L = number of units of labor
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Quiz 10 A pure monopolist is selling 6 units at a price of $12. If the marginal revenue of the seventh unit is $5‚ then: [pic] |[pic] |firm’s demand curve is perfectly elastic. | |[pic] |price of the seventh unit is $10. | |[pic] |price of the seventh unit is greater than $12.
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176 266 390 Price $50 50 50 50 50 50 50 50 50 50 1. (Table: Barrels of Oil) Refer to the table. How many barrels of oil should the company produce to maximize profit? A) 6 B) 7 C) 8 D) 9 2. (Table: Barrels of Oil) Refer to the table. What is the marginal revenue of producing the fifth barrel of oil? A) 61 B) 50 C) 200 D) 250 3. Stating that TR = TC is equivalent to stating that: A) MR = MC. B) P = AC. C) P = Average fixed cost. D) MR = P. Page 1 4. At a ski resort located over one hour from the
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Case Study The Leisure Products (LP) Company manufactures lawn and patio furniture. Most of its output is sold to do- it- yourself warehouse stores (e. g.‚ Lowes Home Improvement) and to retail hardware and department store chains (e. g.‚ True Value and JCPenney)‚ who then distribute the products under their respective brand names. LP is not involved in direct retail sales. Last year the firm had sales of $ 35 million. One of LPs divisions manufactures folding (aluminum and vinyl) chairs. Sales
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benefits and costs at the margin. However‚ the statement would be consistent with economic efficiency if clean up/prevention costs were always zero‚ or damages were always infinitely large‚ or more generally if long run marginal benefits of abatement were greater than the long run marginal costs of abatement over all levels of abatement up to the point where pollution is entirely eliminated. 2 ‘A clean environment is a public good whose benefits cannot be privately appropriated. Therefore private industry
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between the unregulated monopoly price and the optimally regulate price (determined by the intersection of the firm’s marginal cost and the market demand curve). As usual‚ the monopoly determines its optimal output on the basis of MR = MC. Here‚ however‚ it cannot charge a price in excess of p*. So‚ for any output less than Q(p*) (where Q(p) is the demand function) its marginal revenue is p*. On the graph below that gives: pm p* MR MC Demand q m q * 2) The inverse demand curve
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costs. * Additional Measures * Cost theory derives two additional cost measures. Average total cost is the total cost divided by the number of goods produced. Marginal cost is the increase in total cost that results from increasing production by one unit of output. Marginals--including marginal costs and marginal revenue--are key concepts in mainstream economic thought. Falling and Rising Costs * Economists often use graphs‚ similar to supply-and-demand charts‚ to illustrate
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