unit of the product represented by these data since that amount maximizes marginal utility.” Do you agree? Explain why or why not. c. “It is possible that a rational consumer will not purchase any units of the product represented by these data.” Do you agree? Explain why or why not. Answer: Missing total utility data‚ top – bottom: 18; 33. The missing total utility for the second unity can be found by adding the marginal utility (change in utility) to the total utility for the first unit. By consuming
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Suppose that it is the year 2038. Exclusive ownership of a resource found to be required for the production of fusion power has given a firm monopoly power in the provision of this good. What is true of the relationship between the price of this resource and the marginal revenue the firm receives? 25-1 (a) The demand curve faced by the firm is the downward-sloping market demand curve‚ so price exceeds marginal revenue at all quantities beyond the first unit produced. 25-3 The following table depicts
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product or service produced by the firm. One reason for this is the need to make a pricing decision. In fact‚ buyers of many products will want an estimated price or a quotation before they agree to purchase. Managers may also need to decide whether production should be stopped‚ stepped up or switched to new methods or new materials. Managers also need to compare actual product costs with original budgets and to compare the current period with past time periods. In calculating the cost of a product‚ both
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CHAPTER 6 PRODUCTION EXERCISES 4. A political campaign manager must decide whether to emphasize television advertisements or letters to potential voters in a reelection campaign. Describe the production function for campaign votes. How might information about this function (such as the shape of the isoquants) help the campaign manager to plan strategy? The output of concern to the campaign manager is the number of votes. The production function has two inputs‚ television advertising and
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1i) Demand function for air travel between the U.S. and Europe has been estimated to be: ln Q = 2.737 - 1.247 ln P +1.905 ln I where Q denotes number of passengers (in thousands) per year‚ P the (average) ticket price and I the U.S. national income. Determine the price elasticity and income elasticity of demand (8 points). From Lecture Module 3 Equation 4 we learned the alternative formulation of elasticity. Alternative formulation of elasticity EP = dQ/dP * P/Q = dlnQ/dlnP Natural log:
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Total‚ average‚ and marginal product Total Product Curve The total product (or total physical product) of a variable factor of production identifies what outputs are possible using various levels of the variable input. This can be displayed in either a chart that lists the output level corresponding to various levels of input‚ or a graph that summarizes the data into a “total product curve”. The diagram shows a typical total product curve. In this example‚ output increases as more inputs
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you will be creating your brand: please think about what you are saying about yourself when you do any work for someone else! 1. Consider a monopolist where the market demand curve for the produce is given by P = 520 – 2Q. This monopolist has marginal costs that can be expressed as MC = 100 + 2Q and total costs that can be expressed as TC = 100Q + Q2 + 50. a. Given the above information‚ what is this monopolist’s profit maximizing price and output if it charges a single price? Answer: MR
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89% of the US cellular phone market. Oligopolistic competition can give rise to a wide range of different outcomes. In some situations‚ the firms may employ restrictive trade practices (collusion‚ market sharing etc.) to raise prices and restrict production in much the same way as a monopoly. Where there is a formal agreement for such collusion‚ this is known as a cartel. A primary example of such a cartel is OPEC which has a profound influence on the international price of oil. Firms often collude
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resource scarcity exists. The value of the next-best alternative should be considered when choosing among production possibilities‚ calculating the cost of capital‚ analyzing comparative advantages‚ and even choosing which product to buy or how to spend time. 2. *(a) what is Marginal Analysis? (b) Why Is Marginal Analysis Important in Economics? (c) What is the role of Marginal analysis? Marginal Analysis is the process of considering small changes in a decision (control variable) and determining
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The Zinger Company manufactures and sells a line of sewing machines. Monthly demand for one its most popular models is given by the following relationship: Q = 400 – 0.5P where P is price and Q is quantity demanded. Total costs of production (including a “normal” return on owners’ investment) per month are: C = 20‚000 + 50Q + 3Q2 a. Express total profits (() in terms of Q. b. At what level of output are total profits maximized? What price will be charged? What
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