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Unformatted text preview: B) Suppose instead that a firms property tax rises by $100. Explain how a firms optimal output will change in this case and why. 5. Illustrate the Shutdown Rule (i.e., assume that the firm is making a loss) for a competitive firm graphically by showing its profit if it shuts down or stays open in a diagram with MC, AVC, AC curves. 6. Can a monopoly independently choose both price and quantity? Explain. 7. A monopoly faces the following demand schedule. It costs the monopoly $14 to produce each unit of output and it has FC = $4. Provide the TR, MR, and profit for each level of output. P $20 $19 $18 $17 $16 $15 $14 Q 1 2 3 4 5 6 7 8. The demand curve facing a monopoly is given by P = 20 Q and MC = AC = $4. A. What is the firms TR function? B. What is the firms MR function? C. What is the optimal output? D. What is the maximum profit?...
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 Spring '07
 ZELDER
 Economics, Microeconomics

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