because Red Shop will make a 5000 profit and Blue Mart would make a 4000 profit

# Because red shop will make a 5000 profit and blue

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because Red Shop will make a \$5000 profit and Blue Mart would make a \$4000 profit. The student answer stated the opposite which would mean the Red Shop would make \$3000 and the Blue Mart would make \$3500. Student answer is incorrect 4) 1/1 - Student redrew the table correctly. FRQ #2 9/12 Points A) 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 profit B) 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 elastics because MR is positive so that TR rises if P is decreased C) 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 the market share of existing firms D) 1/1 - 1 Point: Student showed correct that in a long-run equilibrium occurs at the tangency of ATC and the demand curve and quantity where MR = MC. E) 1/1 - 1 Point: Student stated “no”, the correct answer F) 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. #### You've reached the end of your free preview.

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