Market Competition-due 1-18

Market Competition-due 1-18 - and technological advances...

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Answer each of the following questions using economic theory covered in this lesson. 1. Fill in the table below. Assume TC stands for Total Cost, TFC as Total Fixed Cost, TVC as Total Variable Cost, ATC as Average Total Cost, AFC as Average Fixed Cost, AVC as Average Variable Cost, and MC as Marginal Cost. TC TFC TVC ATC AFC AVC MC Units of Output 0 20 1 1 2 3 3 4 4 12 5 75 6 16 7 24 8 86 9 360 2. Using the graph below, answer the following questions:
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  The market demand at the beginning is D1 , and its corresponding marginal revenue is MR1 . The initial ATC is ATC1 , and the original supply is MC1 . Therefore,the monopolist sells _____ units at $ _____ per unit, and his/her total profit is $____________. After a given time period, due to investment
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Unformatted text preview: and technological advances, which cost the monopolist an increase in TFC, results in a cost of production decrease to ATC2 and its corresponding supply to MC2 . The monopolist, then, in the absence of price regulation by the government, would like to produce _______ units and charge a unit price of $__________. However, due to quality improvements and effective advertising, the demand increases to D2 , while its corresponding marginal revenue is MR2 , with ATC2 and MC2 remaining unchanged. The monopolist, therefore, produces and sells approximately ______ units at $_______ per unit. His/her total profit is now approximately $___________....
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Market Competition-due 1-18 - and technological advances...

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