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Author Question: A single-price monopolist has the demand and marginal cost schedules given in the above table. What ... (Read 33 times)

nenivikky

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on: Jun 29, 2018
A single-price monopolist has the demand and marginal cost schedules given in the above table. What is the profit-maximizing level of output and price?
 
  What will be an ideal response?

Question 2

A decrease in the demand for eggs results in a surplus of eggs at the original equilibrium price. Explain how market forces will act to eliminate the surplus.
 
  What will be an ideal response?


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fur

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

The profit-maximizing output is 3 units, because that is the quantity for which the marginal revenue equals the marginal cost. The price is 18 a unit.

Answer to Question 2

The price of eggs will fall. As it falls, the quantity of eggs supplied will fall and the quantity of eggs demanded will rise. Eventually, at the new market equilibrium price, quantity demanded will be equal to quantity supplied. The market will be in equilibrium.


nenivikky

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

parshano

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Reply 3 on: Yesterday
Excellent

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