ECN 104 Final Exam December 9th 2011 104F11FE Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. An increase in income will cause a shift in the budget constraint a. outward. b. towards the good most consumed. c. inward. d. towards the good least consumed. ____ 2. If the consumption of one good is reduced‚ how must a consumer alter his consumption of another good in order to remain indifferent between two bundles? a. He must not change his consumption
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switch to another firm’s highly substitutable product than to switch consumption to an entirely different product. Profit in the short run induces other firms to enter; as firms enter the incumbent firm’s demand and marginal revenue curves shift inward‚ reducing the profit-maximizing quantity. Eventually‚ profits fall to zero‚ leaving no incentive for more firms to enter. 3. Some experts have argued that too many brands of breakfast cereal are on the market. Give an argument to support this view
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Baumol‚ every business firm aims at maximization it sales revenue (price x quantity0 rather than its profit. Hence his hypothesis has come to be known as sales maximization theory & revenue maximization theory. According to baumol‚ sales have become an end by themselves and accordingly sales maximization has become the ultimate objective of the firm. Hence‚ the management of a firm directs its energies in promoting and maximizing its sales revenue instead of profit. The goal of sales maximization
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over time under monopoly if the monopolist a. produces that output where average total cost is at a maximum. b. is protected by barriers to entry. c. operates as a price taker rather than a price maker. d. realizes revenues that exceed variable costs. ANSWER: b is protected by barriers to entry. SECTION: 1 OBJECTIVE: 1 4. Most markets are not monopolies in the real world because a. firms usually face downward-sloping demand curves. b. supply curves
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services for Will Bury’s new product. In this paper the subject to discuss is profit-maximizing and increasing revenue. Marginal cost‚ marginal revenue‚ credit markets‚ and the unemployment rate are briefly covered. Additional sections will discuss pricing and non-pricing strategy‚ barriers to entry‚ product differentiation‚ and minimizing cost. Business Proposal Profit-Maximizing and Increasing Revenue Profit-maximizing quantity is figured by determining if the product is considered price-elastic
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Assignment Scope Based on a rigorous analysis of the data provided‚ this report provides details with respect to the profit-maximizing average daily production capacity for DermaPlusTM for each possible reference-based price of $50‚ $100‚ and $150 per unit identified by the consultant. The estimated expected daily profit at each price will also be provided. All unit and price values have been rounded to the nearest whole number or dollar. Information in terms of the recommended average daily
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stock market by investing in monopolistic rather than in competitive industries. ANS: F DIF: 1 5. If he produces anything at all‚ a profit-maximizing monopolist with some fixed costs and no variable costs will set price and output so as to maximize revenue. ANS: T DIF: 1 6. For a monopolist who faces a downward-sloping demand curve‚ marginal revenue is less than price whenever quantity sold is positive. ANS: T DIF: 1 7. A monopolist with constant marginal costs faces a demand curve with
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following average revenue (demand) curve: P = 120 - 0.02Q where Q is weekly production and P is price‚ measured in rupees per unit. The firm’s cost function is given by C = 60Q + 25‚000. Assume that the firm maximizes profits. What is the level of production‚ price‚ and total profit per week? Ans1. Level of optimal production is obtained by setting Marginal Revenue equal to Marginal Cost. If Demand function is Linear then‚ P=a-bq Revenue is R (Q)=P(Q)Q and Marginal Revenue (MR)=a-2bq Here
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of both marginal revenue and marginal cost play a major role. The economically working definition of marginal revenue is termed as: the extra revenue that an additional unit of product will bring. It is the additional income from selling one more unit of a good; sometimes equal to price (MoneyTerms‚ 2005). The marginal revenue of the output of any given product ties closely in the total revenue‚ because‚ dependent upon the final amount of additional units sold‚ the total revenue of a product can
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seller will a. have a negligible impact on the market price. b. have little effect on market equilibrium quantity but will affect market equilibrium price. c. affect marginal revenue and average revenue but not price. d. adversely affect the profitability of more than one firm in the market. Table 14-1 Quantity Total Revenue 0 $0 1 $7 2 $14 3 $21 4 $28 2. Refer to Table 14-1. For a firm operating in a competitive market‚ the price is a. $0. b. $7. c. $14. d. $21. 3. Suppose that a firm operating
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