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Author Question: Using the table above answer the following question. Assume that the marginal cost of production for ... (Read 138 times)

ARLKQ

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on: Jun 29, 2018
Using the table above answer the following question. Assume that the marginal cost of production for this firm is 0 .
 
  If this firm is a monopolist and can only charge a unique price in whole dollar amounts which price will he charge to maximize profits? How much revenue would the firm collect? How would this answer change if this firm were to practice perfect price discrimination?

Question 2

Refer to Figure 2-6. If the economy is currently producing at point A, what is the opportunity cost of moving to point B?
 
  A) 6 thousand hammers B) 30 thousand wrenches
  C) 23 thousand hammers D) 8 thousand wrenches


tennis14576

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Since marginal costs are zero the firm will want to maximize total revenue. This is achieved at a price of 3 . The firm would collect 9 . If the firm is able to engage in perfect price discrimination it will collect 15 (5 + 4 + 3 + 2 + 1).

Answer to Question 2

A


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