ch 9 - Danielle Cirillo Chapter 9 3,4,7 March 3, 2008 3....

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Danielle Cirillo Chapter 9 3,4,7 March 3, 2008 3. Product price Quantity demanded Total revenue Marginal Revenue 2 0 0 2 2 1 2 2 2 2 4 2 2 3 6 2 2 4 8 2 2 5 10 2 A. You can conclude that it is purely competitive because their individual firms have no control over product price. B. C. The demand and marginal revenue curves coincide because they are the same line, they are perfectly elastic. D. With each unit of output total revenue increases by $2, this change in total revenue is also a change in marginal revenue by $2.
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4. A. At a product price of $56 this firm will produce in the short run because it exceeds AVC and ATC at the profit maximizing output. It will produce 8 units because MR=MC. The profit per unit is $7.87 and total profit is $62.96. B. At the product price of $41 this firm will produce in the short run because 41 exceeds AVC at loss minimizing output. Being that MR=MC it will produce 6 units. Loss per unit is $6.50. Total loss is $39 which is less then its fixed costs of $60.
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ch 9 - Danielle Cirillo Chapter 9 3,4,7 March 3, 2008 3....

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