Econ 3.4 - 2.You go out to the best restaurant in town and order a lobster dinner for \$40 After eating half of the lobster you realize that you are

# Econ 3.4 - 2.You go out to the best restaurant in town and...

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2.You go out to the best restaurant in town and order a lobster dinner for \$40. After eating half of the lobster, you realize that you are quite full. Your date wants you to finish your dinner because you can’t take it home and because “you’ve already paid for it.” What should you do? Relate your answer to the material in this chapter.
q2 q1 Q 6.Suppose the book-printing industry is competitive and begins in a long-run equilibrium. a. Draw a diagram describing the typical firm in the industry. I have divided the bottom graphs into Firm and Industry Average Total Cost= ATC1 Marginal Cost= MC1 Price= P1 b. Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. What happens to Hi-Tech’s profits and the price of books in the short run when Hi-Tech’s patent prevents other firms from using the new technology? The newer process reduces the Marginal Cost (M2) and its Average Total Cost (ATC2). The price remains the same (P1) because other Firms do not use the process and help s them earn higher profits. c. What happens in the long run when the patent expires and other firms are free to use the technology? Then the patent expires other companies are able to use the process, thus all other companies curves will decline (ATC2) then the market price will fall (P3)
CH 8.A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of \$10, average total cost of \$8, and fixed costs of \$200. a. What is its profit? 100.
TABLE P Q TR MR \$8 0 \$0 0 7 100 \$700 7 6 200 \$1,200 5 5 300 \$1,500 3 4 400 \$1,600 1 3 500 \$1,500 -1 2 600 \$1,200 -3 1 700 \$700 -5 0 800 \$0 -7 4.A company is considering building a bridge across a river. The bridge would cost \$2 million to build and nothing

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