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because Red Shop will make a $5000 profit and Blue Mart would make a $4000profit. The student answer stated the opposite which would mean the Red Shopwould make $3000 and the Blue Mart would make $3500. Student answer isincorrect4)1/1-Student redrew the table correctly.FRQ #29/12 PointsA)4/4-1 Point: Drew the demand curve downward and the MR curve below that-1 Point: Showed that the profit maximizing quantity is at MC = MR-1 Point: Showed that the profit maximizing price is at MC = MR @ D-1 Point: Showed the correct area of profitB)0/2-Lost 1 Point: Student stated that price is inelastic when it’s actually elastic.-Lost 1 Point: Gave the wrong answer and didn’t explain that the price is elasticsbecause MR is positive so that TR rises if P is decreasedC)2/2
-1 Point: Student said that the demand curve will shift inward (left).-1 Point: Student answered correct that the entry of new firms will reduce themarket share of existing firmsD)1/1-1 Point: Student showed correct that in a long-run equilibrium occurs at thetangency of ATC and the demand curve and quantity where MR = MC.E)1/1-1 Point: Student stated “no”, the correct answerF)1/2-1 Point: Student stated “no”, the correct answer-Loss 1 Point: Student didn’t explained that at the long-run equilibrium P > MC.